J. B. Chemicals & Pharmaceuticals Limited (506943) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. We welcome you to the J. B. Chemicals & Pharmaceuticals Ltd. Virtual Investor and Analyst Meet March 2021. [Operator Instructions] I now hand over the proceedings to Mr. Jason D'Souza. Thank you, and over to you, Mr. D'Souza.

Thank you, Zed. Welcome to the virtual investor and analyst meeting of J. B. Chemicals & Pharmaceuticals Ltd. Friends we have with us today the management of J. B. Chemicals. We have Nikhil Chopra, CEO and Executive Director; Kunal Khanna, President, Transformation; and Vijay Bhatt, Chief Financial Officer. We will start with Nikhil making a presentation telling us all about J. B. Over to you, Nikhil.

Thank you. Thank you, Jason. This is Nikhil Chopra, and I would like to welcome all my friends for the first virtual investor call that we are having at J. B. Chemicals. And just to talk 2 minutes about myself, I'm Nikhil Chopra. I've been associated with pharmaceutical sector for last 2 decades plus. And I'm fortunate enough to be a part of J. B. Chemicals. I've been here at the helm for the last 6 months, and I feel proud to be associated with J. B. Chemicals as a company which have got strong legacy. And thank the Board, new investors in putting the faith in me and the new management team in taking this legacy ahead. Also, I would like to thank the promoter group for ensuring a seamless transition and extending the support across necessary areas. Today, the way we are looking at, I think, the way we want to share the presentation with you, we would like to give a company overview, talk about the domestic business, looking at what we are doing in the international front and the key success factors, what we have achieved. And then Vijay Bhatt, our Financial Officer, will talk about the financial performance. Let me start with the company overview. Today, we'll be addressing our business and the strategic key factors and from our perspective. Before I start with the presentation, I would like to just give a key snapshot in terms of where we are and what is the future strategy that I would like to really want the group to understand. We have a solid foundation built on the principles of trust, best-in-class manufacturing practices, integrity and higher standards of quality, which is well accepted not only in India, but also with our principal partners all across the globe. These standards have helped us not only in building large brands in India, but also have allowed us to support our partners in building large brands globally. So in a nutshell, we have a solid track record of consistently delivering values for over last 4 decades. This year, we'll be touching around INR 2,000 crores with best-in-class profitability. And a significant portion of this INR 2,000 crores comes from India business, which is close to 50%, where we have 5 brands, which are in top 300 as reported in IPM, supported with strong field force of 2,000-plus people, which are on the ground. We also have got deep presence in 40 other markets, out of which there are 2 other home markets outside India, which are Russia and South Africa, which I'll be talking in detail in the coming part of my presentation. We are amongst the top 5 manufacturing in the medicated lozenges part, which is a differential opportunity which we have in our hand, an area which requires a deep expertise. And we enjoy a competitive advantage given the customer relationship, regulated market certifications, which have their own gestation period. As an organization, we are also particular in value creation and reflecting consistent returns over the years and also in the recent past, as demonstrated in our 3 quarter performance. Basically, the way we are looking at the entire journey, we look at -- we are looking at then how do we shape our future strategy. There are 6 key themes, which we -- which I would like to talk about. Major, which is where our business growth theme, which will pivot around therapy -- along with getting into the world of diabetology. And more leverage our equity with the specialist, which is nephrologist and gastroenterologist. Also, we -- as I spoke earlier, we would like to focus more on expanding our contract manufacturing capabilities by adding marquee customers and playing a more proactive role with our clients in identifying new opportunities and life cycle management. Of course, we would like to evaluate the options for expanding our portfolio in India and other markets, incremental R&D and new launches through BD in-licensing as well as M&A opportunity. To support this growth, cost improvement and productivity initiatives will be the cornerstone. Therefore, we'll continue to drive the productivity with our existing teams, which means adding more products but does not necessarily mean adding more people. We will also focus on improving depth to our markets and how we make each international market more productive by adding products rather than expanding the breadth of our markets. Finally, none of this is possible without a strong governance framework. We are, therefore, putting a strong operating layer of governance at all levels, starting from Board to our management team and operational teams. So these are the 6 key levers, which I wanted to talk about, business growth; sizable opportunity, which is in the form of lozenges; augmenting the portfolio in the form of BD, scaling up our R&D effort; productivity enhancement with our existing team. Also, looking at what we can offer more to our customers in international market, and looking at how do we put the strong governance in place. Now let me talk -- let me give you overview on tomorrow, where are we from a domestic business as domestic business contributes 50% to our revenue. J. B. Chemicals, as we -- in India business have been outpacing market performance for last 4 to 6 quarters, where we are handsomely growing at a pace of 18% as compared to market growth of around 7% to 8%. Also, we have gained our ranking. Our -- today, we are ranked as 28th company. We have gained 4 ranks in last 12 months, which tells about the strength of our presence in the domestic market. Also, as I said earlier, we have got 5 brands in top 300, as reported by IPM. And all these 5 brands continue to gain market share, continue to beat the market, and they are leaders in their respective therapy. So as we talk about our domestic formulation, we have a robust story in place, and we are the fastest-growing company as reported by IPM. Getting into some details in terms of where we stand from a brand perspective. We have got our Cilacar franchisee. We have got our Nicardia franchisee. We have got our Metrogyl franchisee and our Rantac franchisee. Also, the strength that the company brings on the table is building big brands, and we have extended our Cilacar franchisee with the help of our -- getting into the combination market with Cilacar, Cilacar T. Also, from a perspective of domestic business, the way business has been driven, we have improved our contribution of chronic therapy. Our chronic therapy, as you see, today stands 50% contribution. And there is a good scope, what I shared earlier, that how can we increase the contribution of our chronic therapy in the coming time. We want to look at how do we leverage the front-end marketing initiatives and the investments that we want to put in place. We are getting into the world of technology and taking some baby steps. I think what COVID has taught us that overall, we have to optimize all the resources that we have in our hand. So we want to complement our physical presence of our 2,000 people working in the market, on the ground by technology, getting to the world of digital, complementing our physical presence with the help of digital. And for that, the steps that we have taken, we are equipping our field force with iPads. So how they can do a better job in the clinic, excel in the clinic, give digital-enabled solutions to the patients, to doctors and getting into a chronic area. As we are poised, we conceptually are covering 300,000-plus doctors, and it is a mix of cardiologists, gastroenterologists, nephrologists. And from a perspective, this will help us overall that how do we improve our overall contribution, which should be coming from the chronic business. From a productivity perspective, today, we stand at INR 4.5 lakhs productivity per person, which is at par with the industry. And midterm, we see this productivity growth, which can easily be 12% to 14% in the coming time. So from a perspective of chronic business, which is 50% contributing to our India business, the entire story of building big brands, and these big brands will continue to fuel the growth in the coming time. And with the newer initiatives that we want to put in place, this will help us to look at in terms of what are the newer initiatives in the business, which will help us to fuel our growth. Our future priorities for India business, as I shared earlier, we are a dominant player in the world of hypertension with our Cilacar franchisee. We are looking at how do we extend this in the world of diabetology. And we have taken some steps in launching a couple of products in the world of diabetology. Equally, we are looking at -- with some newer initiatives and diversifying into newer therapies. We are looking at how do we get into the world of pediatrics, respiratory infections, which will help us to fuel growth in the coming time and enhance the productivity. Technology has taught us in terms of giving the right solutions to the HCPs, that is health care professionals, and will enable our field force to do a better job. That is why we have put in place the entire sales force automation. We have got into the world of sales force excellence. That is where we stand. And there are initiatives which have been put in place, which will help us to do closed-loop marketing and provide better solutions to doctors and patients. Our presence is there in urban and extra-urban market. We are trying to look at how do we leverage the benefit of our legacy portfolio in the Tier II and rural markets and do the -- and do a better life cycle management for our franchises, like Rantac and Metrogyl. Obviously, we would not be shying away by getting in the world of -- and partnership with some of the multinational players in India and also look at -- in terms of if there is sizable opportunity available in buying out some brands, in buying out some midsized companies. These are all on the anvil, and at the right time, we'll be able to share more details on the same. Core objectives that we want to put in place. Today, we are 28th rank company as reported in Indian Pharma Market, gained 4 ranks. And the aspiration that we are putting in place midterm, that we want to be in top 20, which will be a mix of organic as well as inorganic opportunity. Looking at more contribution coming from the chronic therapies, where we stand today close to 50%, and we aspire that our chronic business should be close to 60%. And that will be backed up by the specialty that we want to focus: get into the world of nephrology, get into the world of gastroenterology. Expanding our portfolio. Today, we have got 5 brands in top 300. We are looking at -- at least we should be looked as a company where we have got a significant presence, and we contribute to the pharmaceutical growth. So a presence of around 8 to 10 brands in top 300 is the aspiration that we are putting in place as midterm. New launches historically has been the weak link in J. B. Chemicals. And with me and my team coming in what we are looking at, that at least there should be a sizable value that we should be getting out of our new launches. And at least half a dozen launches in a year, that is what we are aspiring for, and I think that steps have been taken. And with the newer -- with diversifying into newer categories of business and some new launches that we want to put in place, these new launches should also fuel the growth in the coming time. The relationship that we want to expand with the HCPs. Currently, we enjoy a good equity with cardiologists, nephrologists, gastroenterologists. And we want to expand this in the coming time with better coverage of the specialty and have right go-to-market strategy. Field force productivity, as I shared earlier, I think we are at par now with the industry with a field force productivity of around INR 4.5 lakhs. And we are looking at how this field force productivity can go up by putting the right go-to-market strategy. And it is a good scope that we can easily grow on this field force productivity around 12% to 14%. Giving an overview in terms of where we are present from an international business perspective, outside India, we have 2 home markets, that is Russia and South Africa, which I will talk in detail in the coming part of my presentation. And outside Russia and South Africa, we are also present in U.S. and ROW market. U.S. market is more a cost-plus model. And in ROW market, it is more a distributor led model. And this all presence which we have got in this market is backed up by best manufacturing setup that we have got in southern part of Gujarat at Panoli, at Daman, at Ankleshwar, where we have different manufacturing capabilities in the form of sachet, capsules, topicals, IV fluids and varieties that we offer in the term of lozenges. Also, we have got a business in the form of contract manufacturing that we do with some of the marquee global clients, who have the ability to make big brands. We truly believe that how we can be an active partner with them and give them some differential offerings when we get into the world of contract manufacturing, which conceptually helps them to be more market competitive. We have a small business in terms of API, but that business helps us to drive better backward integration in the world of U.S. market. And not the least in terms of -- they are all backed up by necessary compliance approvals, which are rightly in place. And we are fortunate enough to have this all approvals for all our manufacturing setup. INR 1,000 crores business, international: 74% contribution comes from our -- from the formulation part, 20% close is coming from our contract manufacturing capability, and around 10% business is a part of our API business. This was an overview of our international business. Now getting into the detail where we stand in Russia and CIS market. We have got a able and good leadership team, and we have got Mr. Sandeep Nasa, who is our leader. He's been working in the company, who heads the entire Russia show for last now 3 decades. Russia is more a high entry barrier... [Technical Difficulty]

Sir, we are not able to hear you.

Over the last 2 decades in the form of Doktor Mom and Rinza, the capability that we have is the opportunity that lies ahead with us in Russia market. We also have got well-established relationship with the pharmacy in Russia business and that -- with a team of around 80 people spread across Russia, CIS and Ukraine. Going ahead, the way we look at Russia market, we have got -- we already have got 4 key brands, which we want to leverage in the coming time. We have got -- and we have got 2 products approval, which will be -- probably we'll be able to get those products approved in FY '22, which is a combination of cough and cold and respiratory market. And also, we are looking at opportunities in Russia market from a perspective of in-licensing as well as how do we capitalize on the strength that we believe in the world of OTC market. So net, in terms of Russia, if I have to talk about, good brand recall value market. We have got good presence in terms of sales and distribution network and a robust team in place, which will help us to drive our agenda in terms of what we want to do in these markets. Coming to South Africa. South Africa, we have got a subsidiary in terms of Biotech, where JBCPL holds 95% stake. More of this market, if I would talk about, it is a well intense generic as well as public market. And we have got Mr. Stewart, who has been there in the company, who's been running the show for the last 2 decades. And the role that our teams are playing are both in the public market as well as in the retail chain pharmacy. Equally, what we are looking at from a South Africa perspective, that the business that we do is coming from the diversifying sourcing strategy that comes from JBCPL and outside JBCPL. So this is where we stand from a South Africa market perspective. Going ahead, we are looking at that, how do we expand the current generic model, to the right, progressive portfolio augmentation; improve our presence in public market, which is EBITDA accretive; constantly work on COGS, which will help us to be more competitive in the public market. And also, we have got some dossiers, which we are looking at how do we get those dossiers approved, and that is, give a better offering in South Africa market. So outside India, we have got Russia and South Africa, where we have got our own presence: Russia being a branded market, South Africa being the generic play. The game that we want to play in these 2 markets in terms of how do we provide the necessary portfolio and being a more progressive company in this market and play to our strengths. Quick glimpse on what are we trying to do in U.S., ROW and API market. U.S., as I shared earlier, it's a more generic play for us. It's a cost-plus model, and we have got some benefit of the technology benefits that we enjoy in terms of formulations, which helps us to play in niche areas. And it's an asset-light distributor-led model. We today enjoy -- we have got 14 ANDAs approved in U.S. market. Going ahead in the coming time, probably next 2 years, what I can talk about, we want to at least constantly work on around 4 to 6 ANDAs every year and get more and more product approved, depending upon the competitive play. And also under our API strategy, helps us to do a better show with the integration of our own house API to do a good work in our U.S. market. ROW, we have got presence in Asia, Africa, Latin America, Sub-Sahara Africa, it's a distributor-led model. The game that we want to play in this market is in terms of not going wide, but we are looking at how do we improve our depth and provide the teams the right portfolio in terms of the journey that we want to develop -- travel in the ROW market. API is a small play for us. We are in the leading position in diclofenac, where we worked with one of the eminent multinational player. And going ahead, there are 2 points which I want to talk about in the API business in terms of: we will continue to look at introduction of 3 to 4 new products, which will help us to have a better mix of API play in ROW, and equally help us to play our ANDA strategy in U.S. market. So overall, from a commercial point of view, India, our home market, which we'll continue to get more and more focused. Outside India, Russia and South Africa, branded and generic play and the work that we are trying to do in U.S., ROW and API business, which will continue to put our foothold strong in the coming time. Let me talk in detail the work that we do in the world of contract manufacturing. We have got a facility in Daman, which helps us to facilitate the work that we are trying to do in the world of contract manufacturing. We are among the top 5 manufacturer for medical and herbal lozenges with a significant market opportunity. And this business is contributing 20% to overall our business. And outside lozenges, we also do contract manufacturing in the world of syrups, tablets, ointments and cream. And the relationship that we enjoy with key marquee global players, who have the ability to make big brands. And we truly believe that we want to play the role of a active life cycle management and true partnership that we want to demonstrate by offering them differential play in the world of lozenges, in the world of medical as well as herbal lozenges. And this entire facility is backed up by the approvals from all the regulatory from U.S., U.K., Australia, South Africa. And going ahead, in this market, we have got enough capacity to support this business aspiration that we are putting in place for our CMO world. And look at in terms of how do we enhance the relationship with our existing partners and equally add new partners who can come in and offer them the offering, which makes them more market competitive. And just to share that the incremental innovation that we are trying to do, we have got center-fill lozenges. So there are different opportunities available in the world of lozenges, which we would like to capitalize in the coming time. CMO, as I see, is a fantastic opportunity that we have got in hand, which we would like to leverage in the coming time. The way I look at, with the new management coming with me coming in, we have been equally supported by some eminent board members, starting with Ranjit Shahani, who is our Chairman. And Ranjit Shahani does not -- Mr. Ranjit Shahani does not need any introduction. He has got a rich experience of 4 decades plus in health care sector. He was previously the Vice Chairman and Managing Director at Novartis. And also, he has -- he's been on the Board with prominent companies. Equally, we have got Mr. Sumit Bose, who is independent director. He was closely working with government in the finance sector. And we have got Madam Padmini Khare, who heads our Audit Committee. And she has been also -- she has also got a rich experience of 2 decades plus, and she has -- she is also on the Board on many of the eminent players. So coming with new [Audio Gap] Coming in, and with the support that we are getting from the Board and with KKR taking 54% stake in J. B. Chemicals, the journey that we want to travel and the support that we are getting from Board as well as KKR is helping us to put the right vision in place. Also, I would like to take 2 minutes in talking about the team that we have got at J. B. Chemicals, which is a mix of people who have joined new. And equally, the leadership team [Audio Gap] Joining as IR Head. We have got Mr. Sandeep. Rathore who, as stated, on India Business with deployment of the large investment into the market. Expanding this business is important and will help us to drive the cost efficiency across the value chain. And also, we would like to leverage on our business model and invest in R&D, therapies, digital technologies, expanding reach beyond Tier II towns and M&A opportunities. And from a perspective of looking at the entire growth journey that we want to plan out from -- and from -- and the margin that we want to maintain, I think we want to reinvest that in the business and look at the newer initiatives, which will be fueled by the growth trajectory that we are putting in place. Now I would like to hand it over to Mr. Vijay, our Chief Financial Officer, to talk in detail about our financial performance. And yes, Vijay, over to you.

Thank you, Nikhil. You had already set the context and the stage for the people and the audience in this forum. For me to talk more about the company, let me just take a pause and say a few words about what we have seen in the past in terms of the numbers that company has displayed. If you see, the company has been consistently growing for over past few years the high double-digit growth rate in terms of the top line. The bottom line is expanding even at a higher pace. Primarily, this growth has come from 3 founding pillars, which company has set in the recent past. The first one is the focus on the India business, with the company -- when we did the divisionalization and the focus -- clear focus on the therapeutic segment, which we wanted to do. And that's where the results are quite visible. The company has been growing their domestic business at a very healthy pace, and it continues to grow. The other pillar, the strong foundation, which the company has is the manufacturing base. All the manufacturing facilities have been approved by the highly regulated countries agencies. And we are able to leverage on those capacities that we have. And also, the company has, in the past few years, taken up several measures in terms of the cost efficiency, the cost optimization. That has, in fact, helped the company to report not only the top line growth, which any management would like to achieve as well as also increase and expand its EBITDA base, the bottom line. So this founding pillar of the company has helped and is helping even in the current financial year. With the COVID in place, of course, the costs were slightly muted, some of the costs may come back. But we are very much confident that the performance which company has been putting in for over these years is going to give results even in the coming time. Now having said, company has been generating good margins and the cash, but we would be generalizing this profitability, the cash which company is generating into the newer initiative, which company at this stage is looking at, what we can do further. And that's where our growth story has to continue and continue in a better way. There would be many initiatives, which we would be taking up. The primarily, which we are at present, looking at is the incremental R&D spends, which we would like to use our strength to build it on a further -- on a scale where company wish to -- what Nikhil was mentioning, that we would like to take company to a newer heights. And R&D for us will be a main base for it. We would also focus on some of the cost optimization initiative, which company has identified. We have been working on it for the last few years, and we will continue that -- the effort that company has started. Apart from it, something which historically company was not focusing on, was not looking at, was on the acquisitions. Some of the smaller acquisitions, we can look at it. When and in which form, all time will answer, but we may look at some of the value accretion, brands acquisition, a smaller company acquisition. Those are the future initiative which company may consider, and that would also further help this CAGR growth in terms of the top line as well as at the bottom line, which will continue to grow. If you see in terms of the profitability, company, even today also has a very strong profitability. And it's a debt-free company in a way. Practically with the last year, the amendment in the tax laws, when it was announced, the company adopted the lower base rate of tax. And hence, the tax incentives, which were available to pharma companies, was primarily in terms of the R&D benefits. Now company has not opted for that, and we are now going with the lower rate of tax. And hence, our effective tax rate is in the range of 24%. But with the top line growing at a very healthy pace and bottom line growing at a healthy pace, the profit after tax, the company has been reporting good. And which is visible also in terms of the earning per share when we see. I think that journey is growing at a better -- at a good, rapid space. And we believe that with the new initiative, which we would be taking up, this growth would be even faster. To give some sense about how the top line has grown over the past years, the domestic business is the -- at the forefront. The primary factor here is the clear focus, which company adopted by focusing and divisionalizing its India business with the clear focus on the therapy, cardiovascular business, the anti-hypertensive market, the acute therapy. We had a good franchisee in terms of Rantac, Metrogyl. These brands has helped the company to report such a high level of growth. We have been consistently outpacing the market growth. And that's where the strength of the company lies also. We would like to leverage on this strength. And that is reflecting even in the tough time of COVID. Company is able to grow at a much better pace than what many of the players could not. Nikhil also touched upon is that we have been improving our rank in terms of the IPM. And with the kind of a growth at which company is growing, I think this journey, we are very much confident that company will continue to even advance its position in terms of the ranking. As we move forward, I think international business has some mix history, but now with the situation improving globally and certain focus and the initiatives which the company has taken up. Particularly, if you see in the historical period for last about 1 or 2 years, the U.S.A. and South Africa has helped the gain -- the top line grow at a faster pace. Also, some of the contract manufacturing business, which company is doing in the international business, has been helping company report the top line growth. We do see that there is good opportunity for us to capitalize on this particular business. But at the same time, now with the situation in the global market coming to a normal level and the COVID impact is gradually going to fade away, we do believe that the other markets where company is present, particularly the South Africa, Russia, CIS countries, the Latin American market, some of the African market, they have been badly impacted by the COVID lockdown. We do see that this advantage, which we will unfold in the coming time, that would also help to fuel the growth in the top line in terms of my international business that we are working on. Some substance of all these efforts and the initiative which company has been taking up in last few years and which we will continue, can be seen in terms of all the key parameters, which any management would like to achieve and would like to have it on their balance sheet. The company holds a strong return on capital. We have good cash in terms of the free cash on our balance sheet. Company also generates a good amount of cash year-on-year. And that momentum, we believe, would further continue. We would use this strength to our advantage in the coming period. And that is what is the company's futuristic strategy also. The numbers, I would not speak more about the numbers because these numbers are already in the public domain, and people must have already viewed it. But what I would like to highlight is the company has been growing at a very healthy pace in the difficult time also. And not only growing in terms of top line, but what company has been able to do is expanding its -- the margin base. And that is what is building strength. And we are building block by block, and this is going to help the company's performance even become more solid in the coming period. I would like to now take -- like to tell Mr. Nikhil to give some concluding remarks on the company's business, and what he would like as a part of the management and we as a team. Over to Mr. Nikhil, I think, please.

Yes. The way I would like to -- I think, thank you, Vijay, for giving the details. The way I would like to conclude is by saying that in last 6 months, I am pleasantly surprised to see the opportunities that we have got in hand and build on this strong foundation. Our focus will be to drive the organic growth at the market-beating pace, largely driven by our domestic formulation business, an area where we believe that our big brands will get more bigger and new launches will help us to drive the incremental market share and the scale. Also to support this growth, I think we have adequate infrastructure and resources in the short and midterm. Whether it is capacities to support our lozenges, what I was talking in the world of contract manufacturing or our international business, where we are looking at how do we grow that business by offering progressive portfolio. Incremental focus on R&D will be critical to augment our portfolio offering. We will be extremely selective in our portfolio choices and align them to our R&D capabilities, which we will be building for the future. Sustained cost improvement and productivity initiatives will be from -- will be the cornerstone to fuel the growth initiatives. And we want to self-fund our growth initiatives and, therefore, operate with a mindset of less is more, which is crucial to our strategy. And lastly, given the healthy financial situation that Vijay was talking, we will not be shying away from evaluating inorganic growth opportunities, subject to them being value-accretive and operationally synergistic to our existing operations in terms of where we stand. I think this was a quick presentation that we wanted to share with all of you. And I hope that this presentation helps you in terms of getting to know more about what we are trying to do at JBCPL. And build the organization, which is resilient to difficult times and look at -- from an execution perspective, we want to be a highly agile company; get into the world of technology; look at what we can offer to our customers, be it doctors in India, patients, our channel partners, our marquee partners in the world of contract manufacturing. And tomorrow, what best we can do in the world of our home markets outside India, that is Russia and South Africa, and continue to play the game that we want to do in the world of U.S. and in our ROW market and have our strategy right for our API piece. So this was a quick presentation from our end. And thank you all for patience hearing. I will now hand it over to Mr. Jason and Zed, and will be more than happy to take the Q&As. Thank you. Thank you from my side.

I think, Zed, I think we can open the floor for question and answers.

[Operator Instructions] The first question is from Aditya Khemka from InCred AMC.

Am I audible?

Yes, you're audible. Can you increase the volume?

Yes. Perfect. Thanks for the presentation. Very well put by the management. I have 3 questions. Number one, if you could talk about the India business. You said you're open to inorganic growth. You're open to looking at synergistic acquisitions. Can you give us a sense of what is the ticket size you are looking at? Can it be like a few hundred crores? Or can it be a couple of thousand crores as well? So that's question one. Question two is on the R&D side. So you said that you want to invest in R&D to improve your product offerings across your business verticals. So what is the new R&D capability that you're looking at? Are you looking at getting into alternative dosage forms? Or you looking at getting into more therapy areas within India? Where would the R&D be more specifically directed? And if you can guide to your shareholders what kind of R&D budget you are running with for this fiscal and next fiscal? The third question is on the capital expenditure. So historically, we have seen the capital expenditure has been muted over the past couple of years. So where do we stand on the asset utilization? And what kind of capacity you may need for the next 2 to 3 years going forward?

So this is Nikhil Chopra. Let me take the first question. Second question, I will ask Kunal, and then Vijay, you can come on the capital investment. From an inorganic opportunity, the way we are looking at India business, it will be a mix of organic growth, which we have already shared that right now, our productivity is around INR 4.5 lakhs. And we'll continue to grow at a double-digit growth on our organic business. Equally, we will fuel our growth with the help of new launches. And we will not be shying away of getting into inorganic opportunities, which are -- there are already some assets on the table, which we are evaluating. I don't want to get into any specific figures, valuation. The way we are looking at inorganic opportunity is that it should be in line with the agenda that we want to drive in India business and play to our core strength. And there are already some assets which we are evaluating. And those can be in the form of buying out brands. Those can be in the form of buying out midsized companies. Those can be in the form of buying a API setup to fuel our API journey, look at what we can do in the world of backward integration. So that is where we stand from an inorganic opportunity. And we'll be more than happy to share the details at the right time because, as you know, all these inorganic opportunities, they all take time, and necessary evaluation and due diligence are needed to get to the right pricing. So those things are underway, and we are evaluating those opportunities available, and we'll be more than happy to share any details at the right time. I would like Mr. Kunal to talk about what are we trying to do in the world of R&D. And on the capital investment, Vijay you can come in.

Friends, just before Kunal just answers, I just want to say is that Kunal is not keeping well. So he is not there on camera. And his audio is on. Thankfully, he's recovering well. So Kunal, over to you.

Thank you. Thanks. And I hope I'm audible. So taking the R&D part, our approach on R&D will be very selective. What we can say right now is that it will be a gradual ramp-up We are certainly not looking at complex injectables or overnight changing ourselves to an organization, which will have multiple filings. To support our India market, we will continue to work with B2B plays, so that calls for limited R&D investments. Yes, there will be infrastructure and support buildup to help some of our other regulated markets, like U.S. But there, again, we are seeing incremental filings. So from a current state of 1 or 2 filings per year, we may gradually move up to 4 to 5 filings per year. So that's the kind of plan which we have for driving our R&D to support our business.

Yes. Coming on to the point of the CapEx, I would like to just make a point here, is that company has adequate infrastructure in terms of the manufacturing facility. And we may not need any major expenditure in terms of the CapEx for the capacity building. Having said that, there would be a normal CapEx in terms of a maintenance CapEx, which company has been doing for past 2, 3 years, and that drive may continue. Very difficult to say how much would be. But historically, it has been in the range of about INR 60 crores, INR 70-odd crores across the various plants that company has. And at least in the near term, that maintenance CapEx may continue. There is no plan as of now for any capacity-building CapEx.

On the R&D part, I think what Kunal was speaking, I would like just like to add that already, we have got a setup in Wagle Estate in Thane, where we have got around 30-plus employees who are working. And just to also share with the group, we already have hired a new R&D head, who is coming from an eminent organization. He'll be joining in the month of March. And as Kunal spoke, currently, we are working in one -- couple of filings. We'll be more than happy to start working on 4 to 6 filings every year. And also, the work that we want to do in the world of R&D is also closely work with our multinational partners in the world of contract manufacturing, where we offer them differential opportunities and make them more market competitive. That is what we want to do in the world of R&D in the coming time.

Understood. Just one follow-up for you, Nikhil, if I may. When you look at the JBCPL organization today, 50% of the revenue, you said, comes from India. The other 50% comes from your CDMO and the -- CMO and the U.S. business put together and Russia and Africa. So my question to you is, if you look 3 years, 5 years out from where we are today, do you see this mix changing significantly? And if so, what would it be changing in favor of? Would it be 60-40 India exports? Or would it be the other way, 40-60 India exports?

Yes. Good question. I think what I shared in my presentation, that our 50% of effort, time, energy, investment is going to go behind India in the way we are performing in India, the way we are growing in India, the way we are gaining our market share and the way we are gaining our ranks. And if we are looking at some inorganic opportunity, India will be the first on the list. Conceptually, if we do a good M&A in India, obviously, the contribution from India is going to go up. And the journey that we want to travel in India, when you saw what I was talking about India business, 50% of business is coming from chronic therapies. And within India, we are looking at how do we now focus more on chronic therapies. Because that is a business which is more EBITDA accretive. And conceptually, in those areas, you can closely work with the patients. You can get into the world of adherence. You can get into the world of technology. So going ahead, India is going to be key focus and equally, the work that we are trying to do in the world of contract manufacturing, where we are closely working with some of the big marquee players. And there, we have got enough differential offerings, which will help us to fuel the growth and the contribution coming from contract manufacturing business, which is 20% of today revenue. Russia, South Africa, both are -- there are -- the markets are very different. One is a branded market. Second is a generic market. And as I shared more about U.S., U.S. is more a cost-led model. ROW is more a distributor-led model. I think India, obviously, contribution, in the coming time we look at India, India will be contributing more. And within India, we are looking at how chronic business should contribute more.

Understood. Just one more follow-up for me.

Aditya, I think we have a long queue. But can you just -- yes, let's go with your last question.

Sure, sure. This is the last one. So Russia, you mentioned as the home market. But when you see other pharma companies that have been doing business in Russia, at least they are alluding to a very tough operating environment, a very subdued profitability there. So can you talk about, a little bit about how your Russia market currently is behaving for you? And would you expect a meaningful change in profitability or growth in that market in the next couple of years?

I would like Kunal to take this. Kunal, can't you -- why don't you take this question?

Sir, Mr. Khanna's line is currently disconnected. We are still waiting for him to reconnect. So if you could take the question on his behalf.

Yes, I can take the question. I can take that. See, Russia, as I talked about Russia market, Russia market is an entry barrier for many of the players. There are companies who have got their dossiers approved. There are -- but they are not functional in Russia. And we, being present in Russia over the last 3 decades and the setup -- sales and distribution setup that we have got in Russia, and the products that we are trying to get registered in Russia -- Russia is a play of private market, which is branded market; hospital business and OTC play. And with the work that the teams have done in the world of OTC with Doktor Mom and Rinza, we are trying to look at what more we can do and get reentry into the world of OTC. And already, we have got 4 brands. We are trying to build up on those 4 brands. And there are a couple of more brands, which we are launching in this financial year. So there's a cost which is involved of running the show with 100 team, 100-people team working in Russia. But I think once you get the right offering of the products, I think overall, then you are in a position to offer the newer portfolio, which will help you to drive better EBITDA margins. So Russia is a key market that we are keeping in mind. And going ahead, I think with the newer initiatives that we are putting in Russia, this business has to be better EBITDA accretive.

Next question is from the line of Prakash from Axis Capital. As there is no response from the line of the current question now, we'll move on to the next question, which is from the line -- from Rahul Jeewani from IIFL.

Yes. Sir, you have done some incremental hirings across the team. So we have hired a President on the India business, right, with Mr. Dilip Singh Rathore joining us. Now Mr. Savya Sachi used to look at our India business. So how are we looking at the India business responsibilities going ahead as in terms of the incremental hirings which we have done? How the roles and responsibilities would be shared between the various management team?

So Dilip Singh -- so yes, Dilip Singh Rathore has joined a month back, and we are trying to strengthen the entire India business team. And Mr. Dilip Singh comes in hand because of newer initiatives that we are putting in place, what I spoke about getting in -- diversifying into newer categories of business, getting into the world of sales force automation, getting into the world of sales force excellence, getting into the world of technology. So Mr. Dilip has been there for 1 month, and he is trying to understand business. And Mr. Savya is trying to get him immersed into the business and better understand in terms of -- because Mr. Savya has spent a decade in the company. And he's doing the handholding of Mr. Dilip Singh Rathore to understand where we stand as a company and the journey that we want to travel. Because India is going to be a pivotal pillar for our business going ahead. So we are trying to strengthen the existing team. We are trying to put some newer initiatives. So all the newer initiatives that we are putting in place will be driven by Mr. Dilip Singh Rathore, which I think we'll be able to share in detail in the coming investor call, probably in the month of May.

Sure, sir. And sir, if you look at -- you stated on the presentation that our doctor coverage is around 3 lakhs per doctors. Now do you still see any gaps in your doctor coverage where you can further expand the coverage? And how are your initiatives progressing as far as some of the newer therapy areas are concerned? So on diabetology, we have already had a few product launches. So how are those products ramping up on the diabetes side as well as some of the other therapies, which we are targeting on pedia and gastro?

Yes. So I think the objective here is we don't want to go wide, but we want to go deep. So we are, I think, with 2,000 people on the ground, we are covering 3 lakh doctors, which is more than adequate to us. We are looking at how do we build on the prescriber base that we have for our business. So how do we enhance the productivity from the existing doctors who are prescribers for us. And how do you add on the newer prescribers within the period that you are covering? And earlier also, we were covering pediatricians. But now pre-COVID, the teams had planned to get into dedicated attention towards the pediatric and respiratory task force, which we are putting in place in quarter 1. So within -- when we are talking about 3 lakh doctors that we are covering, I think we have adequate coverage. We are looking at how do we diversify into newer category of business for our existing customers and add-on with the existing prescriber base and add new prescribers whom we are covering. There is a plan in place when we are talking of doctor coverage. I think we enjoy good equity with cardiologists, nephroenterologist (sic) [ nephrologist ], gastroenterologist and MD medicine. Now we are looking at how do we expand into the world of diabetes, which is synergistic to the work that we are trying to do in the world of cardiology. We already have launched a couple of products in the world of diabetes, and there are some offerings which will come into the world of pediatrics and respiratory infections in the coming time.

Sure, sir. And in terms of diabetes launches, which we have had, I mean, we are also participating in some of the products which are going off-patent. Now typically, in such products, there seems to be pretty high competition during the initial part as well. So how are you thinking about your diabetes franchise? So could we continue to target such product opportunities, which are going off-patent currently? Or are we looking at some of the other portfolio products, which have already gone generic in the market? And where you see some wide spaces for you to enter at and scale at the portfolio?

So we are looking at both. We are looking at products which have got off-patent. We already have launched vildagliptin. We already have launched dapagliflozin, and both the products are in the market. So we are looking at that opportunity. And I think the learning for us is -- overall, the DNA of the company is making big brands. So we will like to remain focused to our strength and look at what more we can do with our existing prescriber base. And to our prescriber -- doctor prescriber, who is prescribing for a Cilacar, we will go and start demanding for prescription for our diabetic portfolio. So products going off-patent, we want to get into. And equally, what I shared in the presentation, we will be actively pursuing for partnerships in India, which I have done in my previous organization between me and Kunal. So those can be in the form of patented products. Because many of the multinational players in India would like to expand their share of voice with the help of teams on the ground. So we can provide them that platform, and that is that -- and those are the steps that we have started taking. And we would like to get into the world of partnership for patented products. So it will be a mix of products which are going off-patent. And equally, closely working with multinational in terms of partnership for patented products.

Sure, sir. And sir, in terms of the acute portfolio now, because of the better hygiene practices, like with COVID, that some of the industry peers are talking about the fact that the acute group -- therapies can -- the acute therapies could see a structural decline in the growth rate because of better hygiene practices. So what's your outlook on Metrogyl and Rantac as such? Do you think that these brands would continue to grow at an 8% to 10% rate for us? Or we could see some sort of a growth moderation in our acute brands going forward?

So as reported in IPM and internally also, if you look at the way Rantac as an opportunity -- because we are not talking of Rantac as -- Rantac and Metrogyl in isolation. We have fantastically done some good work in terms of life cycle management of Rantac and Metrogyl. So within Rantac and Metrogyl, we have got 20 SKUs. So Metrogyl as a product, which is tablet, which is used for 200, 400 milligram in injection, which are used in hospitals, we have got 6 different formulations of Metrogyl, which has been used with a combination of a dentist or a surgeon, which is Metrogyl P, Metrogyl gel, Ano Metrogyl. There are 6 different formations available in form of Metrogyl, which will help us to fuel the growth. And equally, same goes for Rantac. Rantac also -- outside our Rantac, normal Rantac 150 and 300 milligram, we have got Rantac syrup. We have got Rantac MPS. We have got Rantac 300. We have got Rantac OD. And you are right. I think with the awareness, which is coming in more and more, wellness agenda being driven, the growth may be muted. But we see enough scope in terms of expanding our business, which I was talking outside urban and extra-urban market and go to Tier II and Tier III towns, where we see -- still we see good scope for looking -- for the work that we have done for our Rantac and Metrogyl franchisee in urban and extra-urban market.

Next question is from Charulata Gaidhani from Dalal & Broacha.

Yes. Congrats on the good set of numbers. My question was pertaining to the R&D spend. If you could give some guidance in terms of what percentage of revenue will go into R&D. And what is the focus of the R&D? Is it existing therapy areas or new molecules? Yes.

Yes. Charu, this is Nikhil Chopra. So I think what was shared earlier when we were talking of -- about R&D, currently, we are working on a couple of projects every year. And going ahead, we would like to work on minimum half a dozen projects. It will be a combination of new ANDA filings in U.S. It will be a combination of life cycle management for the work that we are trying to do in our contract manufacturing work with some of the multinational clients. And equally, looking at how we can file more dossiers in the world of South Africa and Russia. I don't want to get into percentage spend to the revenues. But going ahead, with the new leader coming in and the team that we are putting in place for R&D, you will see incremental work, which is -- which we want to scale up in the world of R&D. And this will help us to fuel the growth with the help of progressive portfolio, which has been lacking at our end, particularly outside India.

Okay. Could you give some idea of the quantum spend?

Madam, we don't want to reveal -- get into the world of specifics. But what I shared with you that -- but what we are talking about, that we conceptually want to get into actively scale up our R&D efforts and look at tomorrow, at least ongoing once we are hiring a new leader, we are doubling our team. Obviously, spends are going to go up, but all those efforts we are putting to fuel the growth in the coming time.

Right. Yes. And my second question was pertaining to the profitability. FY '21 has seen a significant ramp-up in profitability. Do you expect it to improve further?

Vijay here. I think FY '21 is slightly on a different footing, and we should take cognizance of the fact that this year is not a normal year, particularly, when we see with the first half of the year, which was impacted mainly because of the lockdown. The expansion in terms of the profitability has come basically for 2 factors. The first factor is the healthy growth on the top line, which company has reported, which is one major factor. But at the same time, the cost base, which hasn't been at the normal level. We do believe that this cost -- some part of the cost will return. But of course, the growth will continue. So I think talking about whether the margin will expand from here on is very difficult question to answer at this moment. One should be realistic also. If you see the expansion in the current financial year versus the last year, the expansion is very sharp. And in any organic business, such as our growth is always on an exception basis. So we have to be very realistic about it. We do believe that margin will grow in the absolute term, for sure. In terms of expansion of the margin, maybe I think we may not be able to see that expansion, what we saw in the current financial year.

Next question is from the line of Tushar Manudhane from Motilal Oswal.

Yes. On the MR, number of MRs, as I see on the slide, [Audio Gap] in 9 months FY '21, the number of MRs...

Mr. Manudhane, sorry to interrupt, but your voice is not that clear, it's breaking in and out, sir.

Is it better?

Yes.

Yes. On the slide, I could see the number of MRs being reduced. You intend to get into new therapies. So how [Audio Gap] for the next 2 years?

Sorry, your voice is cracking in between. If I understand, you are talking about the number of MRs that we have and getting into newer categories, what is the plan. That is what you are asking?

Yes.

Yes. So what I shared earlier, Mr. Tushar, is the entire go-to-market strategy that we are putting in place is to optimize the resources that we have. And we are in the process of putting a new go-to-market strategy. We'll be diversifying into newer categories, but that does not mean that we will be adding people. So we are looking at how do we optimize the resources that we have and get the best out of the teams that is placed. And we are trying to look at combining 1 or 2 divisions and putting the right strategy in place. And how do you fuel the newer initiatives, which we are putting in place for our pediatric and respiratory infections. So as is, if I have to talk to you about midterm, there is no plans to increase the number of people on the ground but get the best out of them with the new go-to-market strategy that we are putting in place and also enable them with the help of technology, getting into the world of digital -- basically getting into the world of digital. Let me talk of digital. Basically complementing my physical presence with the help of digital, that is what is the objective that we are putting in place. That will help us to be more close to patients, offer more digital-enabled solutions, offer -- closely work with patients to drive better adherence in chronic therapies. So those are the plans that we are putting in place. And that is why I shared that today, our productivity per person on the ground is at par with the industry with around INR 4.5 lakhs. And midterm, we look at it to be growing at a healthy pace of 12% to 14%.

Understood. And sir, secondly on -- conceptually, while the in-licensing of product is definitely going to be an advantage for J. B. Chemicals but if I look it from an MNC pharma company, given that practically, we have, say, 1,700 to 2,000 [ people ] while the MNC -- other large-cap companies have got good MR base of 10,000 at least, so how advantageous it would be for the MNC company to come to us?

So conceptually, we'll be playing to our strengths. We are not going to go across categories and start getting into dialogues with multinational players for ABC product. Conceptually, if it is suiting both the parties, for us and for the company with whom we want to work, particularly, let us -- let me talk about in the world of cardiology or diabetology where we have teams of 500 people. And that is the team size for any business unit, whether they have got 10,000 people or whether they have got 5,000 people or whether they've got 2,000 people. So we also have teams of 500 people particularly working in our cardiometabolic divisions. And with the offering that -- and the work that we have done for our Cilacar franchisees, with the work that we have done for our Nicardia franchisee, with the work that we want to do with our diabetes franchisee, I think we can bring a better share of voice as compared to some of the multinational players where their reach is not more than 100, 200 people. So that is how you work with a partner where conceptually -- and with the task -- with the teams that we have got in place, we are close to -- we are covering 300,000 doctors, which conceptually will attract any multinational player to partner with us in some of the areas where we want to closely work with them.

[Operator Instructions] The next question is from the line of Surajit Pal from Prabhudas Lilladher.

In India business, since you have major presence in acute therapy brands, we know that acute products have been facing quite a bit of growth struggle since this corona has impacted for last 1 year. But if I go by the growth figure you have received since corona has come into picture, that is quite a fascinating number in terms of 17%. Then Q3 is 28% even though September was a bit too negative. But if I compare with year-on-year of what you have done in FY '20, those numbers was not that great. So what could be the reason for such a kind of average good growth in last 3 quarters? That is one. Second point is that... [Technical Difficulty]

We are not able to hear second point.

So Mr. D'Souza, while Surajit Pal joins the queue, would you like to take any questions from the chat in the interim?

Sure. Sure, Zed. So let me just ask a question from the chat. So we have Nikunj Mehta from HSBC Asset Management. Two questions that have come up to you, Nikhil. For expanding into new therapies in India, are we looking at organic or inorganic route? Also, this could entail additional MR spends going forward. Is this factored in the 12% to 14% improvement in MR productivity? That's one question. And second is that if MR productivity is improving along with high-growth measures to be taken in export markets, what will be the medium-term EBITDA margin we can achieve?

So I think the first question, already I've answered. I think somebody had asked a question in terms of adding people on the ground. There are no plans to add people, and the growth that we have put in place is a combination [ of organic and inorganic ]. Inorganic opportunity, if it comes in place, we'll be more than happy to share the details at the right time. And the productivity per person that we have taken into consideration of INR 4.5 lakhs and the growth that we are putting in place for the productivity is conceptually 100% based on our organic opportunity. And we would like to diversify into newer categories, backed up by the entire -- our new go-to-market strategy which we are putting in place, which will be visible in quarter 1 of the year. I could not understand question 2.

The question 2 is what will be the impact on the medium-term EBITDA margin, if you would like to comment.

So when we are talking about -- because we are not adding any people, so once you are getting -- once you're going at a healthy pace of 12% to 14%, that itself help you to improve EBITDA margin. And fortunately, for us, 50% business for our India business is coming from chronic therapy and particularly from brands like Cilacar and Nicardia, which have got high gross margins. So that is obviously helping us to drive better EBITDA margins for our India business. And with the growth that we are looking at of 12% to 14%, which is a market-beating growth, I think it should, over a period of time, only help us to improve our EBITDA margins going ahead.

Great. Thanks, Nikhil. We'll take one more question from the chat and then we'll go back to audio. So the question is from Shariq Merchant. What have you done differently over the past 9 to 12 months that has led to accelerated growth in domestic business Q2? Post KKR coming in, what has been the input from KKR so far? And what have they changed internally? And the question 3 is what will be the role of KKR going forward? This is from Shariq Merchant, Duro Capital.

Yes. So I think the way India business and the teams are structured and what I was talking about earlier, the strength of the company is brand building. So when you look at brands like Rantac, Metrogyl, backed up by the life cycle management that we have done with around 20 SKUs which are available for our people to go and detail in the clinic, that has helped us to fuel the growth. Whereas, at the time of COVID, when industry is struggling, which is growing at hardly 7%, 8%, we are growing at a good healthy growth of around 18%. So that tells about the strength of the company not only in chronic therapy but also in acute segment. That has helped us overall -- and that is what I have understood in the last 6 months of me being at JBCPL. So that is where we stand. Question 2 was on -- what is KKR. So KKR has been an active partner. KKR -- in terms of the strength that KKR brings on the table, it's global access. We have been closely working with KKR in terms of the vision that the management team at JBCPL is trying to put in place -- is putting in place. KKR is fully banking on that. And the strength that KKR brings on the table is a global access. Also, when I was talking about enhancing our presence in the world of contract manufacturing and the relationship that KKR brings on the table with some of the global giants, that is where KKR is helping us to work with newer partners to expand our vision of contract manufacturing, which is a combination of lozenges and our tablets and syrup formulations. And equally, when we are looking at pursuing some M&A opportunities, there also the strength that KKR brings on the table. That is what we are looking at from a perspective of how we can be more aggressive, how can we close the deal, how can we be 2 steps ahead in doing the right due diligence. So that is what KKR brings on the table, and they have been playing an active partnership role and closely working with the management team in putting the right vision in place.

Thank you, Nikhil. Zed, we can go back to the audio and take questions from the audio.

Next question is from the line of Sriraam Rathi from ICICI Securities.

Am I audible?

Yes.

Yes. Okay. Sir, firstly on India business, I mean, our current MR productivity is around INR 4.5 lakhs, and we are expecting it to grow at 12% to 14% annually. Any target in mind that -- I mean what could be the ideal level of productivity as per you and by -- after that, broadly, you may have to look for addition into MRs?

So if you look at the coverage that we are doing about the doctor community, we are covering 300,000 doctors. I think we have a good wide coverage across specialties, and we see enough scope. What I was talking earlier, that how do you start getting second -- if you are getting one product prescribed by the doctor community, how do you get second and third product prescribed by the prescribers for JBCPL portfolio and equally, closely working on the doctors who are not prescribing for us but we are covering. So I think from a coverage perspective, we are adequately placed. What I can talk about midterm, diversifying ourselves into newer categories of business which will help us to grow at a healthy pace of enhancing MR productivity and the work that we have done in life cycle management for our big brands and the entire theme of making big brands bigger is going to help us to fuel the growth and equally maintain healthy EBITDA margins particularly for our chronic therapies.

Okay, okay. So sir, is it fair to assume that I mean, this productivity level can gradually rise to INR 6.5 lakhs, INR 7 lakhs also, I mean, where the industry is probably at currently?

So the way we are looking at the growth in the productivity, right now, we are at par with the industry, around INR 4.5 lakhs. And I think we will -- from the journey that we have traveled [ in the last few years of growing to ] INR 4.5 lakhs, I think we'll continue to grow at around 12% to 14% on the productivity front by putting some newer initiatives and working on our core strengths of building big brands bigger.

Okay. Got it, sir. Sir, secondly, on the U.S. market, we will be planning to file around 4 to 5 products now, with -- I mean, with the higher R&D focus. Any color you can throw? I mean because until now, it has been largely between same kind of products which J. B. Chemicals has been filing. So any change in the strategy? Or are there any specific -- or we may be targeting for para IV filing also going forward?

Kunal, you would like to come in?

Kunal, are you there? [Technical Difficulty]

Okay. I will take it. So the way we are looking at U.S. market, we have got around 14 ANDAs which we have already got the approval. And we are working with one of the top players who markets our product, that is Rising Pharma, in U.S., and they have been our active partner in marketing our products in U.S. And right now, we have been working on a couple of ANDAs every year. Going ahead, we want to work on limited competition opportunities which are available, backed up by what I was talking in my presentation, with the help of some of the technology benefits that we enjoy, maybe in the form of OROS technology, in the form of laser technology products that we have got, which is helping us to drive and fuel our growth in U.S. and also the API setup that we have got which helps us to have the backward integration of API. And we can be -- and that gives us a benefit to be highly competitive in U.S. market because U.S. market, one is to understand there is a price drop every year. So you have to go continuously work on improving the cost of goods to be competitive in U.S. market. So the agenda going ahead is continue to work on filing 4 to 6 ANDAs with limited competition, we don't want to get into Para IV, and look at how do we continue to work -- identify products with limited competition and closely work with our partner in U.S., where they have done a fantastic job in this year because U.S. market this year has given us a fantastic growth.

And Nikhil, Kunal here. I hope you can hear me now.

Yes, Kunal.

I just -- yes. I don't know, there was, again, a connection issue. But I just want to add one more point, is that our operating model will continue, which is a distributor-led model, because we believe that exposes us to limited risks. And our working capital situation also remains very healthy on that front. So while we are not kind of striving for a lot of complex generics or Para IVs, we'll continue to be extremely selective and also continue with our existing operating model.

Okay. So the model will continue to be with the single distributor that we have?

That is right, yes.

Okay. Got it. And sir, one on CMO business. I mean that is going to be one of the key drivers for us for the future growth. So I believe that large part of the business is greatly from lozenges, and we had recently augmented that capacity also, I think, around a year or 2 years back. So we are largely focusing on lozenges only or there could be different ones also?

See, as far as the CMO business goes, lozenges form a core part of it, but we are also supporting the same MNC clients with other formulations in the form of syrups and tablets. But we do believe that lozenges is an area where we have strong and unique capabilities. The competitive advantage which we have in this segment is that we do not operate in vanilla confectionery lozenges. We operate in a segment of medicated, complementary medication lozenges. And some of the critical success factors, as Nikhil spoke earlier also, was -- in this segment are around certifications in regulated markets, approval time lines, and we tick mark all these boxes. For any new entrant to kind of compete in this space, it would possibly take 2 to 3 years. From a future standpoint, we would like to expand our main client base, our marquee clients from 3 to 4 to 5 to 6; help this same set of customers expand their geographic footprint. So for example, we are very strong in some parts of Eastern Europe. We are helping the same customers expand their base in pockets of APAC. And finally, be much more particular about proactively participating in product conceptualization and life cycle management also for these big brands through the CMO arrangements.

Okay. Got it. And lastly, one financial question. Of course, I think this year has been benefited because of lower A&D spend. But I mean we are also expecting productivity to improve, certain cost efficiencies to come in further. Is it fair to assume that the 9-month EBITDA margin that we have seen around 28% plus, that should be sustainable going forward? Assuming that the incremental cost -- that costs basically increase but that may be compensated by the increased productivity.

Sriraam, thank you. I think this question has already been answered earlier but I would just like to reiterate. This EBITDA margin, as I said, this year is not a normal year. I mean in terms of the operational modalities. There are certain non-sustainable advantages which most of the companies have got. Having said that, this benefit would not remain, but at the same time, the initiative which the company has taken up and which we will be taking up also would add the profitability at the bottom. As a company, we have never given any margin guidance and -- which we would continue to refrain giving here. My submission here is that let's not try and make a point that -- whether the company would be able to sustain at this level. What our ambition and focus is that we want to grow not at the top line but also at the bottom line. So we want to grow, which is more profitable and productive. And that focus and that endeavor will continue. If that reflects into the higher EBITDA margin, that is the consequence of it. But we would not like to comment anything about whether the margin sustainability will be there or no. But we are looking at a consistent growth in terms of the overall profitability of the business.

See, the way we are looking at margins, I think what we are talking about, the work that we are trying to do in terms of fueling the growth, that obviously helps us in reinvesting in the business and the cost improvement measures that we are trying to put in place -- which we are putting in place also helps us to maintain the healthy EBITDA margin where we are. And overall, it -- what I shared earlier is on the productivity enhancement across the company, not only in India business. So top line growth, productivity enhancement and cost improvement measures are the 3 pillars which are in place, where teams have been working to maintain the top line growth and obviously, better and healthy EBITDA margins. Basically, we are looking at profitable growth. The growth has to come with profits.

Next question is from the line of Surajit Pal from Prabhudas Lilladher. As there is no response from the line of the current questioner, we'll -- I'll pass on the call to Mr. Jason D'Souza for the chat questions. Over to you, Mr. D'Souza.

Thanks, Zed. So a question that we received from chat, this is from Neha Manpuria, JPMorgan. What are the key investment priorities to achieve 60% chronic mix in domestic: people, product portfolio and M&A? What are the focus areas and markets for the incremental R&D spends? Which markets are a drag on margins and return and is expected to materially change over the medium term? So let me just come to the first question first. What are the key investment priorities to achieve 60% chronic mix in domestic: people, product portfolio and M&A?

So I think what I shared in my presentation when I was talking about India business, we are -- the journey that we have traveled from around 38% to 48% in last 3 years, improving our contribution of chronic business, and that journey is -- we'll continue to travel because the teams have done a fantastic job in building brands, particularly if we look at what work we have done in the world of hypertension. Now we want to expand in the world of heart failure. We want to get into the world of diabetes. We want to get into the world of add-on therapies and the world of nephrology. This overall will fuel and improve our contribution towards the chronic business. That is where we stand. And I think this all will help us to -- and this entire objective that we -- the midterm target that we have kept for improving our chronic contribution will be fueled up by the portfolio. And obviously, with the right go-to-market strategy that we are putting in place, both -- it is for chronic and acute, but it will help us to improve our chronic business. And equally, the right investments that we'll be making, particularly in chronic business, to drive better adherence and backed up by the technology-enabled solutions that we want to offer to the patients because patients going ahead are going to play a pivotal role. We are relooking at our packagings, packs that we offer to patients. We want our packs to talk to the patients in terms of when they are taking our medications, how do they adhere to the medication, at what right time they should go and consult their doctor, get their diagnostic test rightly done at the right time. This is a world that we want to get into. And that is how we feel confident that our chronic contribution of business should be close to around 60%.

So the second question, either Vijay or Nikhil can take it. Which markets are a drag on margins and return and is expected to materially change over the medium term? From Neha Manpuria.

So in terms of markets which are drag on profitability, let me just put things right. We are in core different businesses. The company is into India business and in the export business. There are some markets which are tough, but none of these markets are drag on the profitability. So in terms of the profitability, some markets would give you a margin which is higher than your company average, but there are markets where you would be making lesser than the company average margin. If I have to be a little specific, there are certain markets, particularly the African regions, some markets, not all, certain products which we are marketing into the Southeast Asian countries has -- they are basically a generic market where there would be a competitiveness in terms of the overall pricing. Those -- they trade at a margin lower than the company average margin, but certainly, they are not a drag on the business. They add incremental value at the bottom. And that's where, actually speaking, the EBITDA margin expansion in a way is helping us because the company has adequate capacity in terms of manufacturing. So those products and those markets also help margin incrementally, use the marginal benefit of the capacity utilization. So we -- from a management point -- standpoint, we see those as an opportunity and not a drag on the business. And that's how we are going to look forward going forward also.

Great. I'll take one more question from the chat, and then we will hand it back to audio. This question is from Saion Mukherjee of Nomura. What is the contribution of top 5 brands in India, which you've answered to the presentation? But most importantly, are there opportunities to grow these top 5 brands going ahead?

100%. The top 5 brands which is -- which will be a mix of around 45, 50 SKUs, they contribute to around 84% of the business. And what I was talking in my presentation, I think what we have achieved with these brands is the entire work that the teams had planned prior, before time in the world of life cycle management. So between Rantac and Metrogyl, if I would talk about, we have about 20 SKUs. And these 20 SKUs are going to different specialty, which is the beauty of these 2 products, which I have to talk about. And equally now, same we are trying to do with our Cilacar franchisee. We have got 10 SKUs in Cilacar, cilnidipine franchisee, which is -- which are into combinations with different molecules. So that is how we will continue to drive growth. And the entire agenda of what I was talking in India business is to build big brands bigger, gain market share, beat market performance, gain ranks. That is what we see as opportunity in India business. That is how we are talking about enhancing the medical representative productivity going ahead.

Thanks, Nikhil. We'll go back to the audio queue. Zed?

Next question is from Prakash from Axis Capital. As no response from the line of the current questioner, we'll move to the next question, which is from Nikunj Mehta from HSBC Asset Management.

First of all, thanks for the detailed presentation and sharing the outlook on the company going forward. While most of my questions have been answered, I have 2 follow-up questions to that. One is in terms of India growth. So we have been growing much ahead of the peers, particularly in our cardiac franchise essentially. So just wanted to get some sense that -- when I look at the overall IPM growth, it's been kind of a bit of patchy to that extent. So how do you see the 2 molecules which essentially we are present in, in terms of growth going forward? And how do you see the competitive landscape in these 2 molecules going forward? That's question #1. And second question though, you kind of indicated how KKR helps J. B. Chemicals in variety of things. I just wanted to understand that -- from a KKR perspective, when it is looking at branded generic markets in India for any future investments, would J. B. Chemicals would be the front for that or they may look at on an individual basis going forward? These are the 2 questions from my side.

So I think the first question I touched upon when I was talking about the entire theory of making big brands bigger, so we see enough opportunities in terms of both our Cilacar and Nicardia franchisee, where I think -- where we are -- where I believe that we are 50%, 60% market share, which has been reported by IPM. And there is enough scope for this branch to grow because we already have got ourselves into the world of life cycle management of these brands and improve the prescriber base. Because when we talk about Cilacar as a franchisee, we are not only going to a cardiologist, we are going to a cardiologist, we are going to a physician, we are going to diabetologist, we are going to a nephrologist. These are our prescribers for our Cilacar franchisee, just to give you as an example. And equally, same holds for Nicardia. And also, the teams have done a fantastic job because when I talk of hypertension, hypertension as an element, there are the entire gamut of uncontrolled hypertension, undiagnosed hypertension. So we are conceptually into yesterday's world of hypertension with the help of Nicardia franchisee. We are in today's world of managing hypertension with the help of cilnidipine franchisee. We are into futuristic ways and means of managing hypertension with the help of cilnidipine franchisee. So I think the teams have done fantastic job in identifying hypertension as an opportunity, and this market will help us to grow in future. And from a competition perspective, we are getting into the world in terms of how we can closely work with patients, drive better adherence, provide better digital-enabled solutions, provide differential packs to the patients in terms of how can our packs talk to our patients. So those are all the things that we are putting in place to drive our entire agenda in the world of our 2 big franchisee in the world of chronic business. Second question, also I touched upon in terms of the way KKR has been partnering with the management team, and they have been closely working with us in terms of what we can do in the world of M&A, which I will talk about, how we can closely look at expanding our contract manufacturing aspirations that we are putting in place. And if there are opportunities available in the form of formulations which have to be acquired, whether it can be a brand, it can be a midsized company, obviously, J. B. Chemicals would be at the front end, which will be there to take the agenda ahead.

Okay, okay. Understood, understood. Just one follow-up on our doctor reach. So you mentioned that doctor penetration is what you are targeting at. So you mentioned in your presentation earlier that you are at around 300,000 prescriber base. So how -- I mean in 2 to 3 years' time, when do you -- what do you see this number to go to, the 300,000?

So I think I've shared this earlier, that we have enough scope of getting prescriptions for our new products from our existing prescribers, prescription for our products from the doctors whom we are covering but they are not our prescribers. And if we get into some new categories or new therapies, then obviously, we'll be adding on doctors. Tomorrow, if we get into the world of dermatology perhaps, then obviously, we'll be -- because there are 10,000 dermatologists practicing in India, obviously, we would like to cover dermatologists. But as of now and as I see a couple of years from here, I think we are at a good place in terms of the coverage that we have. And I think that will help us to drive our agenda in terms of the growth aspirations that we are putting in place with our existing portfolio and the short-term vision which we have on our new launches that we are putting in place.

Next question is from Surajit Pal from Prabhudas Lilladher. As there is no response from the line of Surajit Pal, we'll move on to the next question, which is from the line of Sapna Jhawar from Dolat Capital.

So on the API segment, I just wanted to understand that -- right now, I think, we are majorly into diclofenac sodium and a large part of the API sales was to [indiscernible]. You have mentioned in your initial comments about backward integration and that you also gained out of export market, especially in the U.S. But are you also looking at this segment as core API that do not captively consume but also sell off newer products into the market -- existing market as it is?

So it's Kunal. You are right in your assessment...

Yes, Kunal?

Yes. You're right in your assessment that our API business is [indiscernible]. We have a dominant position in categories like diclofenac. And our future endeavor is also not to be very, very fragmented. We have identified a certain pipeline of products which will overall take our pipeline from current set of 5 to 6 to almost 10 over the next 12 to 18 months. And further, our strategy will be in line with our regulated ANDA markets. So products like Atenolol, cetirizine, glipizide will continue to get support of our API infrastructure, apart from these 4 or 5 launches which we'll be adding in the next 12 to 18 months, which will be for reg as well as some ROW markets.

And it is largely for captive?

It's going to be a combination of both, but yes, captive consumption will also take priority.

Sure. Sir, second question on the India market as to [indiscernible] of price hike in the Indian segment. Do we understand that J. B. Chemicals' products were marginally mispriced or particularly were really low versus the benchmark? But however, in this journey of last 2, 2.5 years, do we think we are currently -- as far as our pricing structure is concerned, are we equivalent to our peers? Or are we -- or should we still see we have scope for more price hikes to be taken, especially for dominant products? So start that.

Kunal, you are there?

Yes, yes. I can take this one. Yes. So see, with respect to pricing, anyways, if you look at the systemic situation in the Indian market for any molecule, unless there is a rational case, you can't go beyond the 9%, 10% levels. And for the ones which are under the list of essential medicines, under price control, it's all linked to the inflation index. For majority of our products, we believe that we have driven parity. And our future pricing strategy will be in line with what the systemic market situation is going to look like. So that's the way how we -- you will see growth driven by pricing. There will not be an abnormally high price growth which you will see in the near future.

Sure. The last question from my side. So KKR currently holds 54% in the company. Is there a possibility of them hiking this percentage? Or is 54%, let's say, the final one?

I think the vision that KKR had of acquiring majority stake, that has been done so they will continue to hold 54% stake. And that is what the plans they had when they thought of acquiring this asset.

So sir, also, any targets that KKR management shared? What's the vision that they must have shared with you internally of any revenue targets or any market size targets or probably expansion targets that they had in mind? I'm sure you've got all that in the presentation, but though -- I mean any finite numbers that you can share with us in terms of market share achievement that you want to do, in terms of market presence that you want to expand, where we are not currently on?

So what I shared in my presentation is -- I think, was, overall, the way we want to improve our ranking. Today, we are 28 rank company in India. We want to be in top 20. We want to look at in terms of the way we want to grow the business and the pace that we have maintained historically of growing at healthy mid-teens and maintain healthy EBITDA margins. I think -- and which is market beating and overall, build the organization which is resilient to difficult times like COVID. That is the blueprint that we are putting in place for our geography. We have already done our hirings in terms of getting the right teams in place. And the vision that we are putting as a management team at JBCPL, KKR is banking on the vision that we are putting in place, and that is what the journey that we want to travel for next 3 to 5 years.

I would now like to invite Mr. Jason D'Souza to take the chat questions. Over to you.

The first question is to you, Kunal. This comes again from Saion. What is the update on the NDMA issue on Ranitidine in India? And what are your plans with Rantac?

So with respect to Rantac, in fact, we have proactively taken steps from manufacturing, quality and reference standard perspective. We maintain the 0.32 ppm limits as prescribed within the regulated markets, though there is no real guideline which has come in India. We are also working very closely with our API suppliers to further work on non-detectable limits to control the NDMA factor. So even if any guidance comes in India in the future, we are well prepared in advance. Also from the long-term usage perspective of this molecule, this product has adequate real-world evidence, data and safety profile. And this is a product which is actually given to patients at the most affordable rate. So the relevance of this molecule is well recognized by SCPs and regulators. So we really don't see any concern. And we are well prepared in advance and tomorrow even if the Indian regulator comes with any guidance.

Thanks, Kunal. Another question that is from Nitin Gosar of Invesco MF . MNCs typically get into in-licensing deal with domestic players who have good reach and connect with a respective set of doctors. Would it be right to believe that in-licensing deals for JBC may be limited to cardio and gastro where it has some reasonable presence so far?

Obviously, we would like to demonstrate our strengths when we are going to any multinational partner to get the right offering with our patented products. And obviously, the strength that JBCPL has been demonstrating over years is particularly in the world of cardiology and where we have got some presence in the world of gastroenterology. And there are some strengths that we demonstrate in the world of good business also. So those are the opportunities that we are looking forward, but it is still work in progress. And as and when -- at the right time, we'll be more than happy to share the details once things are working for both the companies, if we partner.

Sure. We'll take a question from [ Amej Alkhi ]. When we talk about expanding in cardiac therapy with the Cilacar franchise and its combination products, we are already covering large part of hypertension therapy. So can you elaborate more on what are the areas within cardiac where you are looking to expand? And how will you achieve it?

So we obviously are a dominant player in the world of hypertension. So within hypertension, there are molecules which I shared that -- conceptually with nifedipine, cilnidipine. Those are the calcium channel brokers where we have got a dominant presence. And with the same team, there are opportunities which are available where we can expand in the world of heart failures; in the world of diuretics, which are prescribed by the same doctor community, which helps us in terms of improving our prescriber base, particularly in the cardiology and which has got -- and obviously, what I spoke earlier is also we are expanding our wings in the world of metabolics, that is cardiometabolics because the prescriber community is same. So with the realignment of the teams going to the doctors, we are looking at scope in terms of how we can leverage the opportunity which we have in the world of hypertension, maybe expanding in the field of heart failure, in the world of diuretics, in the world of diabetes. So that is a plan that we are putting in place for expanding our horizon in chronic elements.

Thanks, Nikhil. We'll take a question from Abdul from Anand Rathi, and this possibly Kunal can answer. At what point would you decide to set up a front end in the U.S. market? And what will be the related cost involved? [Technical Difficulty]

So let me take this question. Right now, as is short term, there are no plans to have our direct presence because I think the relationship that we enjoy with our partner, Rising Pharma, they are doing a fantastic job. And the relationship -- we continue to leverage and work closely with them, where the identification of opportunities of filing the ANDAs on our behalfs comes as a close relationship. And we continue to manufacture those products in our best-in-class manufacturing setups. And that is a relationship that we would like to leverage. So there are no plans as is to get directly involved in the front end in U.S. market.

Zed?

So we'll move on to the next question, which is from the line of Viraj from Securities Investment Managers.

I just had 3 questions. First is are there any businesses or segments which we think don't fit into our vision for our company? And if there are -- what are plans for them? That's one. Second is on the domestic business. You talked about in the past, the success rate in new launches were quite low. So if you can just elaborate a bit more, what are the pain points on the challenges there? And with our plans now to accelerate new launches and new therapy areas, how are we looking to address that? Third is on the KKR part. They have a very large global platform in terms of complex generics and specialty portfolio. And they have a very good services portfolio as well into the hospital chains in the U.S. So is there any opportunity which we can cater to in terms of exports or either in terms of in-licensing those products in India?

So let me answer the question #1. There are some parts of businesses which are under evolution in terms of which we want to look at, whether we want to continue or not, but still it is under evolution. So I can't talk more about that. On question #2, in terms of -- when you're talking about new launches -- new launches is the new mantra that we are putting in place for our 2,000 people on the ground because the growth, when we look at which, comes from volume growth, value growth, the price increase that we take and equally, the contribution which should come from new launches. Obviously, when we are diversifying into new categories, there will be new launches which will be coming up. So we are preparing ourselves in terms of how do we go offer some differential solutions, offer some products with different technology to the doctors, to the patients, which will help us to compete in the market because we may be the late entrant. So that is the plan. And eventually, going ahead, we are looking at that new launches in the coming time should also help us to fuel the growth. On the leverage side from KKR perspective, KKR has got a fantastic global presence. We have been talking to them and getting their views in terms of what we can leverage, and there are some assets which are available outside India where they have got close relationship, where we can closely work with some of the companies and get those assets in India, maybe in the form of product, maybe in the form of services, maybe in the form of offering for hospitals. But those, all talks are on. And once we are prepared in India, where, right now, the focus in India is to put the right go-to-market strategy, put the right teams in place in the right geographies and build on that, if there is any inorganic opportunity available within M&A in India or with the help of leveraging the KKR presence across the globe. So those talks are in progress.

So just 2 questions, follow-up. One is on these changes which you are taking in the domestic business in terms of new go-to-market strategy. When do we expect that to be completely executed and indicated? That is one. And second on the South Africa business, the government has started this program of accelerated approvals. So are we participating in this because we have a huge pipeline of products which are waiting for approval? So any update you can share there?

Yes.

You want me to take this?

So new go-to-market strategy, we've been working for last couple of months, and we have done some solid preparations to go out in the market. Perhaps that will start happening in later part of Q1. That is what is the plan. And more details we can share in our May investor call, where I think we'll be rightly placed to talk in more details. Second, on the South Africa part, there are already some of the dossiers which are closely working with the South African government, which should get approved on the fast track, perhaps some of them should be this year and some in the coming 2 years, which will help us to have a better play in both public and private market. So those plans are all because we have got -- the teams which we have got in South Africa are closely working with the government and they have done some fantastic job working with South Africa government during difficult times of COVID.

Okay. If I can just squeeze in one last question. On the lozenges, if you can just provide some color into the opportunity size, what aspiration we have in terms of share of that by, say, next 5-year period. Any color you can, say, provide?

Kunal, you would like to take this?

Yes, yes. See, I think, globally, there are different figures documented about the overall lozenges opportunity, running into $2.75 billion to $3.5 billion. Again, I want to highlight to the group that we -- our focus is going to be on the medicated lozenges side. It's not the plain confectionery vanilla lozenges. This market is niche, and we tend to play with a very selected set of players. Our focus is going to be that we play with all the leading global players, which are the top 4 to 5 MNC companies and have maximum share of wallet in the medicated lozenges segment. We believe, in the markets where we are present, we have reasonably good share of 20% to 30%. The endeavor is to how do that -- how do we really scale that up and also replicate the same model in other geographies.

I would now like to invite Mr. Jason D'Souza for the text questions. Over to you.

We'll just go through the last few questions that we have on chat. So I think first is we have Prakash Agarwal who's coming through chat. We had an early-mover advantage in cilnidipine, in CRB blocker submarket and were successful in expanding in ARB beta blockers. What's the differentiator we are adding in these subcategories? And in diabetes and pediatrics, what is the plan to get higher growth?

So I think rightly stated by Prakash, that was our early-mover advantage with cilnidipine franchisee, and that has helped us to scale this cilnidipine franchisee into one of the top leading brand as reported by IPM, in top 100. But here, what -- I would like to appreciate the work which has been done by the teams, that they continue to remain focused and the entire brand building work that they have done around this franchisee and have done a fantastic work in life cycle management of cilnidipine franchisee with the combination of cilnidipine with telmisartan, cilnidipine with metoprolol, cilnidipine with hydrochlorothiazide, cilnidipine with metoprolol. I think that has helped us to be way ahead and maintain our 50% market share in this franchisee. And going ahead, this agenda is going to continue, where we will identify some of the assets which are niche but the capability of company making those niche brands bigger is a formula that we would like to go ahead. That is what we have demonstrated. In the world of diabetes, we are a late entrant. There are 100 brands with vildagliptin . There are 50 brands with dapagliflozin. But we will continue to remain focused with limited number of launches, but we want to make them big. And conceptually, the scope to work in chronic therapy is to go beyond the pill, closely work with the patients, closely look at how you can drive better adherence, better disease control, have digital-enabled solutions, which I've been talking every time in terms of patient-centric models that we want to build in, which will help us to be different as compared to other players which are -- there are big players, and they have done some fantastic job in the world of diabetes. We are late entrant, but we are looking at -- to go through this route where we want to make our presence felt in the world of diabetes.

Thanks, Nikhil. We have another question from Abhisar Jain of the Monarch Group, and his question is very clear. Can we assume that at least one M&A transaction could happen in the 6 -- the next 6 to 12 months based on the pipeline that you have currently?

See, it can happen in 3 months. It can happen in 6 months. It may not happen in 1 year. It all will depend upon the assets which are available on the table, and we are -- it is under evaluation. And we are in talking terms with couple -- with 2, 3 companies. And if it materializes, then we can constantly want to get into the world of due diligence. And we will not be shying away in terms of aggressively putting the right cost structure in place. So that is what we think from -- because we are poised in terms of we can digest some opportunities which can come across in the form of M&A, maybe brand or maybe a midsized company, and which conceptually can not only have benefit in India but we can materialize the benefit outside India also. So -- but we'll be more than happy to share the details, what I shared earlier, at the right time, and this is what we are looking forward to. The teams have been working aggressively on this, and at the right time, we'll be more than happy to share the details.

The question is again from Ranvir Singh of Sunidhi, and just trying to ensure that we get what he says. This question is to Vijay. As we will be utilizing profits for investments of growth, what will be the impact on our dividend policy?

I think good question. As you see, company has been following a consistent dividend payout policy. And we do not foresee any reason for us to change it materially. But having said this, in the coming time when we are looking at reinvesting our profits into the growth on future, we may revisit the policy. Company has been consistently looking at close -- there is a policy in place. We pay about 30% -- around 30% of our distributable profits as a dividend. But with the new plans in place, the Board has a discretion. They may revisit. They may decide based on their prudence. This is the need of the business for the reinvestment. However, company will continue its legacy of dividend payout. How much it would be would be something which company would -- Board would decide, and it's the Board's prerogative.

And we have another question that comes from Rahul and he -- from IIFL, and I guess he's seeking clarification. You have indicated that you will pursue acquisition opportunities in the India market and also on the API. API has historically not been a strength for JBCP. So would you like to comment first on the first point, Nikhil?

See, we are looking at opportunities, what I shared earlier, in the form of M&A. It can be in the form of brands. It can be in the form of a midsized company. It can be in the form of API, which helps us to do better backward integration for our work that we are trying to do in U.S. market. And also, we'll be more than happy if the right portfolio is available in the form of API, which will enhance our filing of dossiers in Russia and South Africa markets. So we are looking at -- we are pursuing all those opportunities which are coming on the table, and we'll be more than happy to share the details at the right time. And equally, this is where KKR comes in, in terms of the agility that they bring in looking at the opportunities which are coming in the form of M&A, in terms of getting into acquisition of brands or acquisition of companies. So that is where we stand today.

Thanks, Nikhil. And Zed, I think we'll take the last question on audio. I think I can see Ritesh Rathod there. If we can unmute his line, we'll take the last question from him.

Am I audible?

Yes.

Sir, is there a limitation to do investments in your subscale businesses, particularly the branded generic business, the API, the CMO and the U.S. business, which are subscale on absolute -- on a related basis to other peers? When I'm saying limitation -- in terms of doing organic investments, is there a limitation? And if so, if you want to do a descending order of your priority of investments, which area would you do inorganic in terms of priority? Where you want to put your foot first compared to -- and where you would like to put the risks that you...

So as I shared earlier, I think our 50% effort of our investments will go in India. India is our key growth pillar market, and the aspiration that we are putting in India with the presence that we have got, I think that will be -- that will require our attention, energy, time and the money that we'll put in India for inorganic opportunity. When you are talking about U.S., U.S. also, we are making investment by not getting into the world of inorganic, but equally, when we are scaling up our R&D efforts, when we are looking at filing around 4 to 6 ANDAs in the coming time. And we are looking at -- and getting a team who will be working in R&D which conceptually will develop the manpower. All those things are also the investment thesis that we are trying to put in, in the business which is EBIT accretive. So going ahead, India is going to be the growth story for us. But we'll not be shying away if there are opportunities which are available outside India also, which conceptually strategically fits into the blueprint that we are putting in place for JBCPL as an organization.

And any priority in a descending order outside India, because you're too segmented or spread out outside India, like branded generic, U.S. API, CMO?

So the -- if I have to put it, India, obviously, I shared. And obviously, outside India, we have Russia and South Africa as our home markets, where we will look at if there are opportunities available and our leaders are there. And the infrastructure which is there, we would like to leverage if there are opportunities which are available in South Africa as well as Russia in form of acquiring some brands or getting into some OTC segments where there are some midsized companies because OTC is a big play both in Russia and South Africa. And we have demonstrated our strengths in terms of what we can do in the world of OTC.

[Technical Difficulty]

We haven't heard your question at all.

Is it audible now?

Yes. Let's take your last question.

Sir, my question was how much time it would take to change culture of a company which is 45 years old, what steps you have taken on the same? How has the incentive changed for the employees?

While -- conceptually, we have a very good culture. The entire company, if you look at the performance the company has delivered over quarters repeatedly, why should we come in and change the culture? We should look at how do we conceptually put the company in the right strategic direction and get the best out of our employees and continue to deliver market-beating performance and look at what more we can do for enhancing the capability of employees to deliver more for the company. That is why -- that is what is the role of the management team, and we are trying to look at what we can do with our leadership team who are existing, working with us and getting the right leaders in place where we see the gap. And I think that journey, the company has traveled in last 6 months, and I think we are fantastically poised towards the aspiration that we are putting for JBCPL to be an executive, agile and an organization which has a purpose towards driving the right patient. That is what I feel about the organization. It is what I understood about the organization in the last 6 months.

[Audio Gap] to Nikhil Chopra for his closing remarks. And if there's anything that he would like to say.

I think my last answer to the question was my closing remarks. I think we have got a -- as I say, we have got a fantastic opportunity in hand, and this was -- in form of the asset that we are running as a company, and we have got our overall presence in the geographical footprints and the leadership team that we have got in place. I think we are rightly poised towards delivering quarter by -- quarter after quarter market-beating performance. And I would like to thank all of you for participating in first-of-its-kind virtual investor call. And going ahead, we'll be more than happy to once again connect with all of you post our results every quarter and regularly engage with you and continue to share with you the progress that we are making on the commitments that we have laid down in our presentation going ahead, which is our goal for mid- to long term. Thank you all. Thank you all for all the patience herein. I wish you all happy because -- good health because COVID times have been difficult, and I think we are coming out of COVID times. And with government taking the initiative of putting a full drive of vaccination both in government as well as private markets, I think good times will return. And I think I'll be more than happy with my teams to connect with you not virtually but physically. Thank you all once again.