Caplin Point Laboratories Limited (524742) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '26 Caplin Point Laboratories Conference Call hosted by 360 ONE Capital. [Operator Instructions] I now hand the conference over to Julie Mehta from 360 ONE Capital. Thank you, and over to you, ma'am.

On behalf of 360 ONE Capital, we would like to welcome you all to the 2Q and 1H FY '26 Conference Call of Caplin Point Laboratories Limited. Today, we have with us senior management of the company represented by Mr. C.C. Paarthipan, Chairman; Mr. Vivek Partheeban, Vice Chairman; Dr. Sridhar Ganesan, Managing Director; Mr. D. Muralidharan, Chief Financial Officer; and Mr. M. Sathya Narayanan, Deputy CFO. I would now like to hand the conference over to Caplin Point management for the opening remarks, post which we will open the session for Q&A. Over to you, sir.

Thank you, Julie, and thanks to 360 ONE Capital for hosting. Welcome, everybody. Thanks to all of you for taking time out and joining the Q2 H1 earnings call to discuss the results. Please note that a copy of all our disclosures are available on the Investors section of our website as well as on the stock exchanges. And also do know that anything said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. The conference call is being recorded, and the transcript along with the audio will be made available on the company's website as well as the exchanges. Please also note that the audio is copyright material of Caplin Point and cannot be copied, rebroadcasted or attributed in press or media without specific written consent of the company. I'd just like to hand over the floor to our Chairman for his opening remarks.

Thank you. Good afternoon, and welcome all to our investors call. Let me start with what has been told by Harvard cognitive scientists and psychologist, Dr. Pinker, about private knowledge and common knowledge. He makes a crucial distinction between private knowledge, say X, which resides only in an individual's mind and common knowledge where everyone knows X and everyone knows that everyone knows X and so on at infinite. The private knowledge alone could create something unique and also the competitive advantage to any company. Now the unique and competitive advantage of Caplin Point. Number one, higher revenues in smaller geographies of Latin America with personalized patient engagement. Number two, liquid assets exceeding the annual revenue that stands at INR 2,358 crores. Number three, catering to the bottom of the premise of essential medicines cannot be replaced by new age biosimilars tool. Number four, we are not competing with the big pharma, but creating a new ecosystem in the markets and manufacturing. First, market. The focus of the big pharma is always our institutional and brand marketing, whereas we focus more on the private market, especially the last mile which always sells to the poor and middle class in the rural markets. We currently 50% of our products are outsourced either more from both from China and India. And this asset-light model has created the hard assets in India. Then manufacturing. We found the rural women are more discipline. Hence, we are empowering the women by increasing the women employees in our shop floor, which alone is not digitized in our factory currently. We also still retain the skilled and loyal men to continue in our journey with us. We are training the new grades and they are quite good in enforcing integrity, quality, safety with productivity in our facility. We are in the process of digitizing the shop floor like all other areas of our CSL. This will be a digital privilege to the underprivileged women. In the next 2 years, after we complete the COL injectables, we will be 1 among the 4 of 5 injectable exporters to U.S.A. with 12 lines, both put together of CSL and COL and we'll be mainly catering to the U.S. market. Number six, we are in the process of buying a land in Mexico where we are planning to start our factory. This is only to avail the benefits offered by the Mexican government recently and the Vice Chairman will detail the number of these stations in U.S., Mexico and Chile from India and China. Number seven, we also have plans to start a liquid oral facility in Guatemala, which would increase our revenue and profit by selling a big range of liquid products in Central America. And exporting liquids from India or China does not have a competitive cost advantage. Number eight, we are also looking for a meaningful acquisition to increase the top-line and-bottom line of the company and the Vice Chairman will detail an opportunity which came to our place in the recent past. However, we felt that particular opportunity is not a good fit for our business, hence, we told them that we could look for something later. Number nine, we are also aware that one day artificial human intelligence and machine learning will rule the world. Robots will replace the routine to difficult to manufacture jobs. Keeping this in mind, we should also legally look for a country which supports robots for manufacturing of generics. However, we know that these robots will not have empathy or a feeling for the poor. Of course, we don't even know whether the future robots will have common sense and the gut feel. We at Caplin, we still feel stepping to the bottom of the pyramid is a compassionate journey, which would continue forever. Finally, we also accept that no competitive advantage is an iron clad and it must be earned on a daily basis. Everything worthwhile is always uphill, and we should never give up to go up. Now let me pass on this to the Vice Chairman, Mr. Vivek, to give his presentation. Thank you.

Thank you, Chairman. I'll touch upon the U.S. business a little bit before moving on to the rest of the world also. We are happy with another set of consistent numbers that we have done, both in Caplin Point and Caplin Steriles. And in Caplin Steriles, we've seen growth in both the B2B and the B2C businesses, which I'll touch upon in a minute. The growth is seen predominantly due to the new approvals that we've received over the last few months and also capturing a larger share of the existing market for the products that were already approved. In addition to our existing pipeline, we've been actively building up a pipeline of ANDAs that we are acquiring from outside, which helps fast track our entry into some of these products because typically, when you acquire an approved ANDA, you can get to market within 6 to 9 months compared to starting from scratch, which is around 18 to 20 months on a best case scenario. We've already acquired around 4 ANDAs so far, and we're in the process of acquiring 5 more as we speak. This should happen in the coming few weeks. Once everything is completed, we should be touching around 45, 46 ANDAs, which is we feel a very decent number considering our first ANDA was approved only in 2018. To ensure that we're also utilizing our capacity effectively and also being true to our original DNA of being asset-light and focusing on outsourced manufacturing as well, we are also starting to outsource some products for CSL. We have already started with the first 2 products being outsourced from another highly quality conscious company in South India. And we're in the process of discussing with them to move a few more products to them so that only the high-value and very tricky products or complex products are being manufactured in-house until our complete capacity expansion in COL 2 or Phase III, as we call it internally, is completed. Our large offering and variety of sterile products from CSL is getting even larger and even more diverse as we start doing more exhibit batches of products like prefilled syringes at this plant. We have around 11 products that are at advanced stages of development, and we plan to file almost all of these 11 by the next financial year. Some of these are additional to the existing approved ANDAs. So these would be what we call as post-approval supplement where we get the approval within 6 months rather than the traditional time line of 10 to 15 months. We are also adding cartridges from the same line, which includes the GLP-1 products. In fact, in 4 countries in Latin America, we've already filed the dossier, and we should be in the first wave of generics when the patent expires. We are also working on another very niche technology at CSL, which is BFS or blow-fill-seal technology, where we are working on a pipeline of products that includes unit dose ophthalmics and inhalation products. When it comes to CSU, which is our own label in the U.S., Caplin Steriles U.S., we are very happy with the progress so far. We targeted breaking even within the second year of operation, but I'm glad to inform that not only have we broken even within the first quarter, we actually have become profitable in that entity, and the numbers are very similar to the parent companies, which, as you all know, is fairly robust as well. We have launched 24 products within the first 12 months, and we are targeting another 15 products in the next financial year. And going forward, we expect our own label to occupy a significant share of Caplin Steriles' sales in the coming years. We are also looking to license more products from other partners, other licensing companies, both in India, China, et cetera, for our front end as we get more comfortable with how the whole sales network happens over there. In addition to U.S., we are making good progress in our next very high focus market of Mexico. We have already filed 35-plus products. We have 20 approvals along with our partners. And we are also working on a larger pipeline of 80 to 90 products that we are confident will be filed within the next 12 months. Most of these are internal products and the rest of it is all from our partners in China, which are basically ANDA products or EUMA products where we expect the approval to come through quite quickly. Another highly focused area for us is Chile, where we have -- we already hold around 125 product licenses. We have recently started our warehousing for private market sales and local tender sales over there. This is picking up pace as we speak. And just like Chairman said, we are also aligning with the global push for onshore manufacturing. In this -- on this account, we are also not against the concept of an inorganic acquisition. In fact, we are now more and more getting comfortable with that idea. And along this line, there was an opportunity that had come up in the U.S. for something that was sizable. But as Chairman was saying, we were able to engage with a private equity company that was able to actually make those numbers work, which were actually quite significant for a company our size. So it goes to show that as long as we continue to do things the right way with a very sharp focus on cash flow, bottom-line and top-line, our valuation will put us in a good position as and when we do something inorganic. It is very important that it fits in with our line of growth and fits in with the overall models and things that the company always stands by. When it comes to CapEx, our Vizag facility is cleared. We've received the CTO, which is a consent to operate. We are working on the first few scale-up of APIs as we speak. And our oncology API facilities also coming up at a good speed, and we expect this to be completed by next year. Finally, there is no specific -- nothing specific to be reported on the tariff position as status quo, we are still exempted from tariffs, and we are in the same boat as everybody else on that. So happy to take any calls later. I'll request our CFO to throw a little bit of light on the numbers before we open up the floor for questions. Thank you.

Thank you, Mr. Vivek. Good evening, everyone, who has taken time off to attend our investor call. Let me briefly take you through the Caplin Point performance for the second quarter and the first half year of FY '26. Overall, results are gratifying and have -- company has grown to almost all financial parameters. Operating revenue grew by 11% year-on-year. Our growth continues to be broad-based across geographies. Total income grew by 12% year-on-year. H1 revenue of INR 1,098 crores exceeded full year revenue of FY '21 was INR 1,085 crores. The growth in other income of INR 14.18 crore has primarily come from deployment of incremental cash. As we have in the past explained our target is occur at least INR 300 crores to INR 350 crores year-on-year, and that has put us in good state. And INR 14.8 crores the exchange rate has also helped us another 2-point increase in exchange gain. It's the extent of INR 2.3 crores compared to last H1. While the revenue grew by 7%, QOGS grew by 8.2%. That means our operational efficiency has improved, and this is directly from its contribution margin. Employee expenses also grew just by 7% year-on-year with productivity growing up. So OpEx also grew 8.2%. That means we are constantly monitoring the spending. We are discreet in our spending. This has resulted in only 8.2% increase in miscellaneous resulting in increased contribution in the profitability. The OpEx as a percentage of total revenue is 24.8% as against [ 25.6% ] last year. Above factors have resulted in a growth of 18.2% in EBITDA margin, where both revenue growth of 12%. So capitalization of INR 48 crores accounted for additional INR 2 crores of depreciation. PBT grew by 19.4% year-on-year from INR 322.8 crores to INR 385.5 crores, is 35.1% as against 32.9% previous year. PAT of INR 311 crores is higher than the PAT of 388 crores achieved in full year of FY '22. All above positive factors have resulted in growth of 21.6% is past. PAT stands at 28.3% as against 26.1% what we achieved in the corresponding period. It may be pertinent to note that we have been promising about 25% as our target PAT. So we are way ahead of that. Coming to the balance sheet, the company's net worth crosses INR 3,000 crores mark. Precise, stands at INR 3,159 crores. Our chairman has already talked about the liquid assets, which stands at INR 2,358. Cash and cash equivalent stands at INR 1,334 crores, as against INR 1,180 crores as of March '25. We have incurred cash expense of INR 94 crores on capital related items. So capitalization during the H1 was INR 48 crores. These are in WAP. We have a WAP of about [ indiscernible ], which is primarily an account of Caplin One Lab injection projects, which is almost in the final stages, which is about INR 90 crores. And probably by December, we'll go on go on stream. Others are relating to Caplin One Labs expansion, which Mr. Vivek explained, like, API oncology, right, and the Phase III or COL 2. So these are the other projects that going on. Inventory closed customer and transit accounts with 67% of our total inventory and receivables transit 117 days, I think it's 118 days as of March. As you may recall, we will think that we can take that below 120 days. We are working on this. Coming to cash flow, CFO stands at INR 254 crores as against INR 185 crores in the past year corresponding period, and free cash flow after CapEx stands at INR 160 crores against INR 109 crores in the corresponding period. Compared to peers, we are happy to announce that we are way ahead of our peers, comparable peers in terms of healthy margins and the strong returns. That's because discipline and efficient business model. Just to summarize, the Caplin Point stands on a foundation of unique business model, which our chairman explained. Operational excellence, which is evidenced by increasing contribution margin. Financial prudence evidenced by our containing of [ cost ] and discrete spending, and sustainable growth is evident by decent growth in both revenue and then out of the target growth in PAT. So thank you for your continued trust and support in the company, and we'd be glad to take any questions. Over to you, Mr. Vivek.

Thank you, sir. We can open up the floor for questions now, please.

[Operator Instructions] Our first question comes from the line of Garvit Goyal from Nvest Analytics Advisory.

Sir, my question is on the capital allocation side. So, we are having free reserves of more than INR 1,300 crores, while our average annual CapEx in the last 3 years has been around INR 200 crores. And it seems like for the next few years, we will be in a similar range. So at the same time, the ROCE that we are doing is well above 25%, but a larger part of the cash is lying in the sales instruments, maybe earning 8% to 9%, right? So even the PAT period in the recent year, that appears to have outpaced the sales growth largely due to this treasury income. So from a shareholder perspective, wouldn't it make sense to preserve what's required for the CapEx or the inorganic opportunity that you are talking about and distribute the excess cash through dividends or buyback instead of letting such a large amount earnings optimal return. So that's my first question, sir.

Okay. See, we still feel that going for a meaningful acquisition at a later date, which would actually give more benefits to our investors. The reason being we are -- although our top line is not growing very fast, I hope you would agree with me about the cash flow and the profits, which are now very, very comfortable. And if you compare with any of our peers, we have definitely cut above the rest the risk. And we now actually -- if you look at most of the big companies, they have become big not only by organic growth, but also by inorganic growth, which means the most important one I feel actually is looking for some meaningful opportunities in the form of acquisition. That's why we need to keep some cash actually in reserve. Is it okay?

And can you share like -- I mean if you are speaking about like we are very much open to the inorganic acquisition. So you must be currently having something in inventory. So can you share some insight on that, like whether we are evaluating some inorganic acquisitions right now? What is the status?

Somebody who met us actually recently, it has been told by me and the Vice Chairman, they were ready to actually fund us provided that they wanted us to dilute our stake, which we were ready because that particular opportunity was very attractive in terms of actually in fact, at the face of it. The investment would be in the region of $300 million from that side. We have to reduce our stake actually by 20% and other thing. And the company, which they told us also is doing around $200 million. But the issue is that's not a meaningful fit. They are not complementing actually something in the form of what we are not doing, and this is not going to be a good fit. And they were also -- they accepted and because of the fact that they were doing well, and the sales was decreasing and also the profits. So why I'm telling this one only to say that there are people who are approaching us, actually, one such prefund, which is one of the top 10 in this world. And they came to us, they told us this opportunity. The others, of course, we didn't give much importance because you were asking for some other priorities, which is not the best priority for us. So definitely, there is an opportunity for an acquisition. It has to be -- again and again, I'm telling it should be meaningful.

Yes. Just to add to the Chairman's point, a couple of other things also. So we get these opportunities almost on a weekly basis. And we have to evaluate what really fits in with our line of growth, which is specifically towards the larger markets of LatAm, also in the U.S. and to the distribution model that we have been successful in the past with. Number two is whatever acquisition we do, we need to make sure that the rest of the world markets, which we are very, very strong in also is benefited by. So it should not be very specific to one particular region itself, which was the case with the one that was on hand. On paper, it was excellent numbers. In fact, the size of the acquisition was a significant one, and we were open to it. But once you started peeling away the layers and understanding the next 5 years, it just didn't seem like what we expected it to be. So just to strengthen the point that we are very much for it if it makes sense to us.

And what they're asking for the equity deal, like instead of cash acquisition?

No, no. We don't want to go into too many details of it because it's not happening also, right? What we are trying to say is, see, we have -- as a family, we own around 71%. Now for this deal to have happened, this was several hundred millions, right? So we were even open to the concept of liquidating some of our listing just to make sure that we take a much larger company on. But again, it just didn't fit in with our line of growth. And just to show you that we are not being too conservative or anything like that. And we're also preserving some of that cash because if we go for an acquisition like that, there needs to be a larger ticker -- larger check price as well, and which we are not shy of writing. That's what we are trying to say.

To add it in one line, probably when they invest actually $300 million that kind of money, the overall actuality equity will expand. So some percentage which is said will be reduced to the promoters. That's exactly what I was trying to convey.

Understood. And just one last thing on U.S.A. operations. We saw Y-o-Y decline in the PBT there despite a top line growth of 25%. So is there any specific reason for that, sir?

I would request Sathya, our CFO, to answer this because we have not really seen a decline at least, yes.

Thanks for the question. This is Sathya Narayanan here. So if you look at the CSL plus CSU consolidated, what we have been tracking now, the Q2 PBT is around INR 20.2 crores as compared to last year INR 17.13 crores. So it has actually increased.

So it's not only that. I think CSU is -- sorry, just to interject. So CSU, if you look at it, it's literally 9 months old, right? So I think it's far too early to consider anything or compare anything on a quarter-to-quarter basis, please.

The next question comes from the line of Aditya Pal from MSA Capital Partners.

First of all, I want to congratulate Mr. Vivek and also would like to extend my congratulations to Mr. Ashok for becoming Vice Chairperson in the company. Going to the question part. So my main doubts were mainly around Caplin One Labs. So now that our injectable facility is also online in oncology, how should one read the asset turns and increase in revenue, say, over the next 2 years from that facility? And also, when you're answering, if you can also touch upon what are the -- how are we in terms of the regulatory time lines getting this facility audited?

Okay. See, now that -- as I told you before, our growth actually, which has come only from the smaller geographies. Now that we are moving to the larger geographies, whether it is South America or North America. So it may take a little time actually to complete the registration and some of the products which are in the form of OSD, whether it is oncology or general product, we'll have to go for actually biostudies also. So it takes time to complete the registration. But the biggest advantage is the markets are big. Although we have not been concentrating much on actually the institution business, the opportunities have come to us for the institution business also in the recent past in the smaller geographies, too. And we have found it's very lucrative. The same thing will happen in the larger geographies, too. The reason being the larger geographies are dominated by the big players. First, it's multinational. Next, it's actually Indian top companies. And our size is a midsize. So we are not trying to compete actually with somebody of our actually size. We are trying to go with actually the big sized company, which means their overheads will be high. They will always quote the higher price in the tender, even if it is a private market. That means the opportunity for us for growth is multifold. It's a question of time before we really make it. In every market, what is important for generics? Generic actually is nothing but a commodity business. Only thing we should not be the commoditized characters in the sense you should not have a model which should be commoditized. If your model is actually that you cater to a particular segment with variety and actually novelty and quality generics at affordable cost, you still have a same with the middle of the pyramid and the bottom of the pyramid. So we are very sure that we'll continue to grow, but it's a question of time a little here and there. That's it.

No, I completely understand, and I also understand the broader business. My question was more to do with the oncology facility because if I see the oncology facility has come online, we are already doing OSD doses and now we've -- our injectables have also come online. We are targeting both the existing markets as well as regulated markets. We have a very good gross block over there, close to around INR 96 crores with around --

I think I was able to give you the answer. Is it okay -- sorry to interject. Is it okay to give the answer now?

Yes, yes. Just either you or CFO sir can answer that. I don't mind.

I'm Paarthipan talking to you. Yes, I can tell and of course Vice Chairman also will add to it. As I told you before, the business that we do today is more like a vertically integrated business, something similar to the big boys. The only difference is the volume of the business is high. But the model, especially in some countries is very unique. In some countries, of course, you have to follow them also. But while following them in the tender, we have an added advantage. Advantage is our price will be like our price may be slightly lesser than the big boys, but it will be much more effective and much more profitable for us. So we will not only concentrate on the smaller geographies to start with, we'll go for the bigger geographies also in future, whether it is oncology product or general product or injectable, products are products. And everywhere the products are sold. In some areas, it's more of a private market. In some areas, in the private market itself, you have to go for leading chain. In some areas, you have to go with the small chain. In some areas, the tender, if you keep the goods next to the customer, right from the government to the private customers will come to you. That's exactly the model we have been doing for the last 20 years. In the last 20 years, unlike other companies of our size, we are in a position to have a cash flow and liquid assets is mainly because of this model. So markets doesn't change. But the model, when there is a change in the model, model attracts the customer to come to your place. So whether it is an oncology product or actually other products. The only difference, suppose if the product cannot be sold through pharmacies, then you have to sell through clinics. Then what is needed is you'll have to go actually, you'll have to appoint somebody who will go and tell the doctor, here is a company which has got a warehouse and so on and so place, and we have got all these products in our warehouse. The doctor himself will say, either I will place the order online or you come next visit, I'll buy it from you. This is the model which is happening everywhere for generics. Is it okay?

Understood. Sir, also, I just wanted to understand now with regards to our EPI facility upgradation as well as oncology facility that is injectable phase that has been completed. So just wanted to understand the accreditation. Now where are we in terms of obviously, the semi markets would -- the healthcare authorities would have accredited. But what about EU CGMP or U.S. FDA, or [indiscernible].

Yes. I think we are going ahead -- what we are going ahead with, Aditya, in the beginning is we are first going to go for our INVIMA inspection, which is what we have done in our Pondicherry facility also. So this will happen hopefully early next year. In fact, we have an INVIMA inspection happening once again for our injectable section in Pondicherry for general category products because many of the semi-regulated markets, they sell -- the ampules sell a lot more than the vials, which is what we do in Caplin Steriles. Having said that, we are also going to be applying -- in fact, we've already applied for the audit of our oncology facility as well. They've not yet given us a date, but we expect that to be sometime next year, post which, of course, we are not sitting idle, right? So once the facility has come on stream, we are doing exhibit batches for products that we have developed. And once the INVIMA approval comes through, we will be filing all those products. So, from a pure time line angle, for the existing markets, we are already doing business for the larger ones such as Mexico, Colombia, Chile and all of that, this will probably start by Q4 of next year.

Understood. Just one last question before I come back in the queue. So now that we are filing the product registration, either be it ANDA or be it with CEPs or be it with other geographies, and we are attaching our own API to that, especially in the general section because our oncology API is yet to come online. So how should one read that in terms of our gross margins because we are already posting really strong gross margins, at least for the last 4 quarters. So how should one read that?

I would probably put it in a slightly different manner. So of course, definitely, gross margins, I think, over a mid- to long-term will be enhanced because we have our own API. But more importantly, what happens is because we are into injectables and ophthalmics, the amount of API that goes into a product is very, very less, okay? So we don't really occupy a large percentage of anyone's value chain because it's not like OSD where you have 500 milligrams in a tablet or 700 milligrams in tablet. In most injections, it's like 10 milligrams, 20 milligrams and stuff. So many times, what happens is the API vendors, they prefer to supply their products, they give preference to the larger buyers, which are the OSD players. So for us, making sure that we have API available at all times is going to be very, very important. Number two, the -- which ensures continuity of supply, right? And number two, the compliance factor is also in our hands. In the past, we've been burnt a little bit by some API player that goes into warning letter or things like that, by which case, our approval also doesn't come through. So these are all things that can be avoided in addition to the cost. Cost is something I feel you will look at it from more of a mid- to long-term perspective.

The next question is from the line of Karan from Anubhuti Advisors.

Sir, my question is regarding the hedging policy of the company. As we are well geographically diversified, so how do we manage this currency risk?

Yes. See, the currency risk actually in places where we have our warehouses is managed this way. See, currency risk actually in a country which cannot be managed by us because you know very well, this is something in the form of an international issue. But when you have -- and you keep your goods in the warehouse, even if the receivables actually takes a beating because of currency risk, you have an advantage of actually increasing the price of the goods that are in the warehouse and sell it actually to offset the loss, which has happened because of the currency risk.

Okay. So do we enter into any derivatives contract or so...

No, we don't. Of course, we don't because we have been actually -- currency risk is universal, which you know very well. And then because of the currency risk, we never lost anything in a [ big way ].

Yes. In addition to that, 2 more points also is please remember that almost 35% of our products goes out of China, which can technically be called as like export, right? Yes. So we sort of have a natural hedge a little bit. So we've not gone for any hedging. A couple of the countries where we operate in, the local currency itself is the U.S. dollar. So that also helps out. Yes.

Okay. So for FY '25, we -- if we -- I'm just looking at our annual report. So in the annual report, we had the foreign exchange earned is INR 720 crores and foreign exchange used is INR 25 crores. Export is INR 720 crores and import is INR 25 crores. So it shows that we are facing some currency rate because --

I could not understand. Can you please repeat?

I've understood the question. What is reported in the annual report is pertaining to the stand-alone market. Okay? Stand-alone Caplin as a stand-alone. The exchange, the exposure and the import currency outflow and the inflow does not belong to the group as a whole. What our Chairman, and Mr. Vivek was explaining was the group as a whole, right? So Caplin stand-alone market here doesn't depend much on imports. So naturally, the 25% is absorbed by cash outflows, right? So the INR 725 crore

Yes. As [indiscernible] said that on a consol basis, it acts as an actual hedge. It will match this imports and export number.

I would like to add one more thing. Our business model is such actually that we don't import APIs excepting actually CSL. Most of our business that happens from China is exporting formulation directly to Latin America through our subsidiary. I don't know whether that helps actually to understand your ratio.

Okay. No, no. Because from last, I guess, from 12 quarters, I have seen the numbers, we have this INR 47 crores of translation gain. So that's the reason I have raised this question.

That is pertaining to the foreign exchange translation, the term of the subsidiaries across the globe. Whatever is happening in India is taken to the P&L, Whatever is happening in terms of the revaluation of the receivables, revaluation of liabilities, and I think the rest of that goes into the -- because we can't consider that as an income. It goes through the OCI growth. So that's gets [indiscernible]. So, the INR 311 crores what we talked about PAT does not include that figure, right? This is a notional thing which is valued on 31st of every quarter or 30th of every quarter and then reversed on the 1st of next quarter. And what happens that quarter the next quarter [indiscernible]. So this is not flowing into the -- as we said, as Chairman also said, we have not lost INR 1 on account of currency rates. Rather, we have been gaining substantially over the period. That's what it is.

The next question is from the line of [ Harsh ] an individual investor.