Caplin Point Laboratories Limited (CAPLIPOINT) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Kaplan Point Laboratory's Q4FY26 Earnings Conference Call, hosted by 361 Capital Market, Private Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal for an operator by pressing star and then zero on your touchtone telephone. Please note that this conference call is being recorded. I now hand the conference over to Ms. Julie Mehta from 361 Capital Market Private Limited. Thank you and over to you, ma'am.

Thank you, Farah, and good afternoon, everyone. On behalf of 361 Capital, we would like to welcome you all to the 4QFI26 Conference Call of Kaplan Ponds Laboratories Limited. Today, we have the first senior management of the company, represented by Dr. C.C. Partipan, Chairman, Mr. Vivek Partipan, Vice Chairman, Mr. Ashok Partipan, Vice Chairman, Dr. Seedal Dhanesan, Managing Director, and Mr. Lee Muldidharan, CFO. I would now like to hand the conscience over to Captain Point Management for the opening remarks. Over to you, sir.

Thank you, Julie. Thank you, everyone, for joining, and welcome to our Q4 and FY26 results and earnings call. 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 note 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 do note that audio conference call is copyright material of Kaplan Point and cannot be copied, rebroadcasted, or attributed in press or media without specific written consent of the company. I would like to now hand over the floor to Chairman for his opening remarks.

Thank you. Good evening, and welcome to our Inverstorce call. Let me first lift out the differentiation that we have created in the last five years. Revenue doubles from 1,085 crore to 2,300 crore in 2526. Liquid assets tripled 928 crore to 2,726 crore. Free cash reserves tripled 470 crore to 1,470 crore. Rebita, PBT, and PAT increased by 2.5 times. Investments in CAPEX stands at 900 crore in the last five years. The gross contribution improved due to operational efficiency. Currently, we are building new factories for injectables. All the nations for the new factories are imported mostly from Germany and Italy. In the next two to three years, we'll have 17 injectable lines for USA and other regulated markets of the world. Our factories will be digitalized. Every machine that enters the factory will have video master to make the qualifications easier and also for operational efficiency. Our video SOP, for which we filed the patent, has some unique features. It is visual before verbal. We do not depend on one QA or one QC or one production or one engineer. The knowledge will be stored in the video library. Our visual SOP ecosystem is both kinetic and non-kinetic. The kinetic side involves cameras, screen, voiceover, online monitoring, and dashboards. On non-kinetic side, visual intelligence, behavioral discipline, institutional learning and memory, compliance consciousness, operator confidence, and quality mindset. For example, China's rice is a kinetic and non-kinetic story. The present world affects the following APIs, solvents, freight, and lead time to destination, currency swings, energy unpredictability. However, our model of keeping the goods next to the customer in the last 20 years has produced these compounding effects. Hence, we always keep the goods in our subsidiary warehouses for a minimum of six months stock in the form of stock in the warehouse, stock in transit, and work in progress. This anti-fragile model has really helped us for the best fundamentals, even in ROW markets of right time, in the last five years. Now that we have substantial ANDA, We, in addition to that, we also buy for our business. In the next three years, we will have maximum products registered in the highly regulated markets such as USA, Mexico, South Africa, Brazil, Chile, and Colombia. Further, we increased the number of women employees on our shop floor, which ensured the discipline. The discipline that resulted Due to women empowerment also guaranteed the integrity and quality which are very, very essential for regulatory inspection. The financial freedom for the rural women made them comfortable at their home and also in our shop floors. We always arranged to pick them up from their houses for all the ships which ensures their safety too. During volatile period, the cash becomes a strategic oxygen. Our cash flow helps us to build new factories, and we are also buying, as I told you before, more and more ANDS for the U.S. market, and we have been trying to buy a distribution company, either in Chile, Mexico, or Brazil, and we are sure that we will be able to register maximum products in this region. At that rate, it will help our distribution company in case it will buy. That will actually take us to the nook and corner of the private markets of these countries. This one is not the mainstay for big companies. Hence, the focus of our business will be more on private market in addition to the tender businesses. We will also focus more on R&D for hormone injection and inhaler areas, which are unique in the regulated market. Further, we're also on the lookout for a meaningful acquisition of a facility as we have enough cash resources in our system. Let me also convey that I have read actually in BS, Business Standard 1000 of March 2026. They mentioned that we, Kaplan, stand at 673 among the 1,000 listed companies of India, which comprises of all treatments in addition to pharmaceuticals. They also mentioned that we stand at 42nd position among the pharmaceutical companies. When I looked into the details, I have found that 16 companies above us had lower profits than us. The statistics is based on the top line, not on the bottom line of cash flow. Finally, When our revenue doubled and liquid cash and liquid assets tripled, we never had the extraordinary fundamentals that we are creating now. We only have one USGS base factory with three old lines and two new lines. Now that we are going for a massive infrastructure expansion, as I told you, that we would have 17 lines of ingestables in the next two to three years. And we will also have automation, digitization, and visual SOPs, more ANDAs, and more registration in the regular market of regulated markets of LATAM entering in countries like Brazil and South Africa also will increase the prospects of our business. The variety of injectables in the form of liquid injections, ophthalmic, PFS, bags, BFS, Philfinish, Lyo, Onco injectable, Hormone injectable will be there in the next three to four years' time, two to three years' time, and will also take us to the next orbit, which is for sure. Finally, as you all know well, business in the formative years is the puddle of unknown unknown. When you develop the cadence for your business over a period of time, and you start with the KTH growth, then it's simply going above and beyond. That is the deliberate growth. Thank you. Thank you very much.

Thank you, General. Now I request Ashok to give us a few comments.

Thank you all. Thank you all, and welcome to our investor call. I'll be talking about our Latin American facts and a few points about how we've been growing in Latin America. I would like to start with Chile. This is our newest market. We have won 35 products to the tune of $10 million for the next 18 months to be supplied. We have also received 135 registrations in Chile so far. We have submitted around 40 more products. Our private market is the most important in all the countries where we are. So as Chairman mentioned, we have two candidates that we are looking to offer to buy. There are two solid distribution companies that reach no concordance of the country in Chile. We have these two candidates because they actually have their own sales team. They have their own logistic team also. So, we are currently doing bio studies for more than 40 different products that are of very good margins and have very few players in Chile. I would like to move on to Central America, where we've been present since 2002. So, a peculiar thing about Central America is what happened during COVID was that a lot of independent pharmacies started growing a lot. And during COVID, what they basically did was they just started opening pharmacies wherever they could find a space because a lot of people were going out of jobs and they put their savings into the businesses. So, we made sure that all these individual pharmacies survived. And we did a recent inquiry into which we found out that there's shelf space for Kaplan's products of 41% in these individual pharmacies. So while we were talking about this with the board, we wanted to start a liquid manufacturing facility. And the reason for this is once we register all these liquids, Our shelf space in these independent pharmacies will go from 41% to 57%. We are also getting into brand marketing in Dominican Republic, Guatemala, and Ixperagua. We chose the central nervous system line where we already have bio-autonomous run for more than 12 products, and we will be starting with that in September of this year. Going forward to Mexico, our biggest market in Latin America so far, we've received 25 registrations so far. We participated in eight different products for a two-year tender, which we won, all of them. We also participated in an oncology tender with a partner of ours from China who gave us four different products, and we won those products, too. We plan to do a sale of around $4 million in the coming two quarters in Mexico. As you all know, We already purchased a lamb in Mexico to build our first factory in Mexico because we get a 16% advantage over price when you participate in the tenders in Mexico. We will be having liquid ovules, suppositories, and blister-facking for fertility for tablets and capsules. This is the update from my side, and I would like to pass it on to Vivek. Thank you.

Thanks, Ashok. I'll just take a few minutes to very quickly brief everyone on our progress in the U.S. Which is continuing to be one of the most important pillars of our growth and long-term strategy. As many of you would have seen from the results, FY26 has been a very strong and meaningful year with progress on almost all parameters. You know, this is from a few years ago, we were a cash burn EBITDA negative company, and today we completed around 470 crores with EBITDA that sort of mirrors or comes very close to the parent company's numbers, which have been benchmarked amongst companies of our size. So we are very happy and proud to report that. On the product front, this has been a standout year for us. We've received approvals for 10 ANDAs in the last four quarters, and we've also acquired another 15 ANDAs with five in Kaplan 1 May, taking our total tally as on date to 60 ANDAs as of this morning. And importantly, this expansion is not just in numbers, it's also in depth, because we cover the entire gamut of sterile products. You know, we have products. Which is in vials, in pre-fill syringes, in IV bags, in three-piece dropper bottles for optile mix. We are now getting into cartridges. We're also getting into blow-fill seal. So not only are we showing good progress with the products that we have been doing, we are getting into sort of uncharted territory for Kaplan Point as we get into some of these complex technologies. In addition to U.S., we will start seeing some meaningful revenue out of non-U.S. markets in the coming few years as well because we've already filed 54 products globally in non-U.S. markets such as Canada, Europe, Australia, South Africa, et cetera, and we'll start to see some progress there. From a capacity standpoint, as Chairman said, we are building phase three at a very advanced stage, and we're also expanding capacities internally in phase one and two with expansion of our IV bag line to three times the capacity. It's a very niche area where we have multiple products already approved. And as we get into the slightly more complex platforms, this opens up new opportunities for us when we put up our retail arm of the company shortly. So this, I think, would be a good time to touch upon Kaplan's own label in the U.S. A lot of people are very skeptical about Kaplan launching our own label because our B2B business was doing so well. People were a little bit skeptical, saying that this might, you know, distract our partners, and this might probably, you know, show some degrowth. But very happy to say that in our first full year of operations, we've nearly touched 100 crore in revenue. Now, we were about 11 million plus in revenue with our own label, and we've done this with no degrowth whatsoever in the B2B business as well. We had launched 30 products under our own label in the last year, And another 15 products is going to be launched in the coming year. We have weekly ordering from the four largest wholesalers in the U.S., and pretty much most of the large IDNs that do business in injectables are our customers right now as we move from strength to strength. So, I would say that, in summary, our youth business is transitioning from a phase of foundation building to one that is scaling and growing in depth. So, with a very strong pipeline, expansion of capacities, entry into complex technologies, etc., we are very well positioned for sustained and profitable growth of the years ahead. And I would like to request our CFO to throw some light on the numbers before we open up a question.

Yes, thank you. Thank you, Mr. Green. Good afternoon to all who have taken time off to take part in this university's call post-FY26 research. The results have been highly gratifying, and we have pleased that you have done well across all parameters. The numbers are already there with you for a couple of hours now, and we will be glad to clarify your stories on the results. Instead of going over the numbers again, I would like to present distinct financial points in the assumption. One, there is an exceptional balance sheet compounding effect that happened this year. Our network's expanded day was 743 close. During the year from 3331 crores from 2018 to 86 crores in the previous year, this is 26% in one year, that is the signal for intrinsic value creation by the company. Massive product translation research afflicts, which is a hidden value that has contributed to us in the form of network also. So product assets are 177 million against liability of 22.2 million. So as you all know that we are a 100% export-oriented company and assets outnumber the liabilities. So, this has resulted in FCTR movement of about 141 crores, which has gone directly into the resource of the company. And then third point will be, as already chairman put it, cash fits in zero leverage. Continue to strengthen our balance sheet with 1431 crores in cash and 2726 crores in liquid assets. This strength provides us great, significant strategic flexibility, as Tavon also put it, that we are on the lookout for meaningful acquisition. Earnings Quality and Cash Conversion. CFO remained strong at 523 score, representing 80% of the cash conversion of fact. This shows profits are real cash, not only in books. Profit growth of 20%, ahead of revenue growth of 13%. Profitability grew materially ahead of revenue growth, reflecting operating leverage, and improving business mix. Next is CAPEX. Before CAPEX, I would like to inform the investors that our CAPEX R&D spent this year, I think, adding one place with almost 5% of our turnover, and This is the first time we have crossed 100 floors, all in dispense. And the Catholic feature for the last year is 238 floors. And just as the summary of the ongoing project, how to book a person's work, what we have in this age, can be a Catholic 154 floors. CWAP, I don't know what it is, primarily representing what is our injection plant in Sarkalo, oncology injection plant, which incidentally has been captured in the month of April, post our MOH approvals and whatnot. And advances, what we have played, we have talked about enhancing the line capacities. We have already played an advance of modern line growth for various imported equipment. And the balance of a fine resource will be incurred in the next 18 to 24 months, from out of our own cash generation. Then, the turnover ratio, people were asking last time. So, in Latin terms, it is about 3.91 times. And the inventory held in market. And if we have a potential of really to about 900 growth in sub-state, so our strategy to keep the inventory closer to the customer and then is paying high dividends. This week excludes, of course, inventory in the U.S. facility, U.S. factory and the warehouse there. To summarize, SA-26 was not only a growth year, but also a year of strong balance sheet compounding, net worth increase by 740 euros, operating cash flow above 500 euros, liquidity pools taken to 2700 euros by remaining virtually debt-free. This is all from me for the first instance. We will be more than glad to take any questions. Over to you, Mr. Drake.

Thanks, Seofasar. If we can open up the floor for questions now, please.

Sure. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may enter star and one on the touchstone telephones. If you wish to remove yourself from the question queue, you may enter star and two. Participants are requested to please use only their handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Aman Soni from 7alpha. Please go ahead. Mr. Tony, your line is unmuted. Please ask a question.

Hello, hello, am I audible?

Yes, now you are audible. Please go ahead.

Yes, hi. Thanks for the opportunity, and good evening and congrats for the good set of numbers. The question is on the growing cash transition. How does management is going to prioritize between the inorganic opportunities and the incremental state tax and the higher shareholder payouts?

As I told you before, the inorganic opportunity, in fact, we are waiting in the wings. It can be in the form of actually buying the ANDA, which, of course, we have been doing, actually. We are waiting for more and more opportunity on that aspect. And as I told you, the distribution company will also open up bigger opportunity for us, for the private market, especially in Latin America. And. See, going for acquisition, for the sake of acquisition, I'm sure we would not actually, we would not advise us to go for actually acquisition without going for a meaningful acquisition. That will be a vanity, you know, that I don't think can always addressable. And as I told you, what is important today, especially in a WCA world, we are going for the completion of facilities. And we'll be completing most of the facilities, you know, that are injectable, which are our, you know, there are hardly three or four companies who would have 16 or 17 lines of injectable actually in India. When we complete all these injectables, all these injectables we are aiming to go for U.S. and other major markets. That means that's a great opportunity which will open up in the form of not only for our own products to be sold in U.S., but also in the form of CMO. Second one is we are completing more on R&D for complex products. This is one of the things which is very important. As you know well. And the third one, we are increasing the registration in many of the larger geographies. These are a few things which are very important. If you need any other questions, please tell me. I will be able to answer to your question also.

Got it. Got it, sir. Secondly, on the receivables part, receivables have grown materially ahead of the revenue or revenue growth. So, is this timing related thing or any other reason for that?

I could not hear properly. Rivik, are you able to?

Yeah, request via phone to take this, please.

Yes. As we have mentioned in the press release also, while the SETS resource which I talked about improving my network, it has also increased my receivables. So, out of 136 days, what you have reported, 11 days is attributable to this SPPR, which has gone into receivables, but it has not flown to me. So, first of all, my receivables would have been 125 days. So, I have been promising on 120. As rightly said, timing also is one of the factors that I have done. You see, last shorter, we have won a big tender in Salvador, and a lot of supplies have gone into that. We share in the process of being received in the market, and because the receivables will be collected by end of June 2. So this is a big tender, and most of the supplies have gone during the February, March, and then we are in the process of receipt today. So this is one of the factors that also contributes to this issue.

I would like to add one more. The currency in El Salvador is dollar, U.S. dollar. And when I was working in this Latin American market, I used to see Colombians giving a lot of credit in Ecuador, where the currency is dollar. The currency of Colombia used to get weakened, and they allowed deliberately, they used to give credit more, so that their hand was also more because of the depreciation of their own currency. Here, of course, we don't want to do it that way. Even if the delay that happens, you know, from El Salvador is going to contribute to actually in the form of increased profit for our company, as you know well, you know, the dollar actually is getting strengthened and our rupee is getting weaker. In no way this is going to affect our bottom line also.

Yes, understood. And just last question on the Outlook Forever 27, you know, in the terms of the top line and specifically on the kind of margins, these are very exceptional margins we are doing. So how much structural are these margins we are going at?

We will continue to do well. As I told you in the course of my speech, the best is yet to come. Maybe the best will come after two to three years. If you look at actually the past, in the last five years, I don't want to repeat again actually what all tripled, what all doubled, and all you have seen. So the next three to five years is going to be the best period for Kaplan Point. And of course, we will do well actually, but it's difficult to tell anything on a quarter-on-quarter basis or on a yearly basis. Whatever we say, everything actually is happening in the form of building the factories or whatever it is, because we don't see many companies of our size building so many factories without a debt. And after having invested in the capex, still we have enough cash flow that will also help us to go for inorganic growth, as you mentioned. But we are waiting for actually that kind of opportunity. It will happen, and it happens. Whatever you expect in the form of the group can come even in actually six months or one year or so if you go for an inorganic actually opportunity. But again, we don't want to simply grab anything and everything, but rather we would prefer to wait and actually go for something which is meaningful. Is it okay, please?

Yes, I got my answer, sir, and thank you. Thank you very much. Thank you very much and all the rest of the week. Thank you so much. Thank you.

Thank you. Participants with questions may enter a star followed by one on your handsets. The next question is from the Lion of Ahmed Madha from Unify Capital. Please go ahead.

Thanks for the opportunity. I have a few questions. Firstly, the... Revenue growth in the LATAM Africa business, in XUS, has been pretty strong. And last few quarters, we added close to high single-digit, mid-single-digit growth, and this quarter is relatively exceptional. So, it can give some sense what has led to high growth in the specific geography.

See, sometimes markets fluctuate. And whether it is B2B or B2C, generic business is based on supply and demand. We, you know, we have an advantage of keeping the goods actually in the warehouse. If the profitability is not there in our sales, we will not sell. Selling for the sake of selling doesn't make any difference to the company. Sometimes you wait and actually do it. Sometimes, of course, we bundle it and sell also. At that point of time, there is a possibility that profit may come in single digit also. But overall, if you look at it, as you rightly said, the overall positivity for the year 2526, I think is fairly good. Am I right?

My question was from the front of revenue growth. If I look at the revenue growth of... Non-U.S. piece of the company, that revenue growth percentage was in single digits for last few quarters, and we have spoken on the call that it will take a couple of years for us to jump up, and you have been doing a lot of initiatives on Chile, Mexico, and other markets. So the question was that this growth is higher in this quarter. Is there any specific factor which explains it?

I can even highlight. See, today we don't have depth of order. The facilities we have is running actually at the optimum capacity. If you look at actually our business, you will see at least 40 to 50% of it is in the form of actually outsourcing for a later market. So, we don't want to, especially, you know, when we go for outsourcing, it's not easy to get a good facility where you can do the outsourcing very effectively. That's also one of the reasons for us to actually limit the top line. But at the end of the day, what is important, whether it is a Latin American growth or, you know, U.S. growth, overall only you'll have to look at it. Am I right or something? The Latin American growth will start flourishing, actually, after we complete the restations, mainly in markets like Mexico. Now that, you know, as Ashok told, the business of chili will start from this year, and it will start actually increasing manifolds over a period of time. I just like to leave one point.

The increase, what you are referring to, the growth from 432 pros to 420 pros this quarter, especially, we are just answering the previous question on the data, which has a bearing on this aspect. So, we did supply a lot of material, close to 50-55 gross during the quarter to the Salvador. The tender risk value is about 15 million, and most of the cost has gone from India. That is the reason this gross in Latin America is showing a better than normal gross in the office. And the US has gone over 20%. Mixed is slightly distorted, but this is the reason.

Yes, yes, tender business, of course, we add to rush and then export everything, probably that's the reason you're telling. Okay, okay. I didn't get it properly.

Okay, nice. Okay, yeah. And on the U.S. side, this year, we have done exceptionally well in terms of growing the business and having our own label. From here on, with whatever A&S we have acquired and organic approvals, we have got about 10 of them. Is it fair to assume the growth rate of 20%, 25%? That's what our run rate in U.S. shall continue till we reach a larger number?

Yeah, we're very confident that current numbers can be sustained. In fact, we are confident that it can grow from here even further. Again, the most important thing, as what Chairman was saying, is we're not seeing a dearth of orders. In fact, we have an order book that's full for another six months almost. You know, and to an extent where some of these lower margin, very high volume products, we're not even taking them on board, you know. So, I think we are certainly on track to see a very strong next year for CSL. In fact, very strong next few years for CSL with all the capacity coming through. When it comes to our own label, the target we've set for ourselves is to double what we did last year. And I'm fairly confident that we should be in a position to achieve that.

Would you like to sort of view a range of numbers, what sort of growth they can achieve, at least for the next year? So, of course, look, we don't... Yeah, we don't have guidance, but I'm just trying to see.

Okay, so when it comes to what current growth was, I think it was close to 30%. I think we can see another 25 to 30%. And, uh... Next year, on the overall Captain Seren's business, when it comes to our own label, we did close to 100 crores, so the idea is to touch or go very close to 200 crores for the coming year.

So, that's it. Last question from my side, in terms of you've spoken about acquisition, considering an acquisition, even last quarter and similar this quarter, and you spoke about obviously buying end days and the sort of profile, but considering the amount of cash balance we have, what sort of, what profile of acquisition will consider apart from buying end days, which I'm assuming won't be a large ticket size. So it can give some sense of the profile of...

So, when it comes to acquisitions, there are many things.

I see, of course, being a listed company, all of our reserves, everything is in public domain and for everyone to see.

So, you won't be surprised when I tell you that almost on a weekly basis, we receive a few opportunities, right? There are some opportunities that come in the U.S., there are some that come in Latin America. One or two, in fact, come for the domestic market as well, you know. So, the ones that we will be targeting is similar to what Chairman was saying, is good distribution entities, Especially in countries where we are very early or we are very new or in countries like the U.S. where it makes meaningful sense in terms of the knowledge that we gather. And when it comes to ANDAs, I'm looking at it personally, we'll be very opportunistic in terms of what we can acquire because we need to sort of strike the right balance between making sure that we launch all our approvals on time and at the same time not run into any sort of dirt in the pipeline because typically for most companies, including ours, the R&D outstrips the capacity, right? So, injectables... An area of high criticality in terms of compliance and manufacturing. Scaling up is not as easy as it is in the whole of solid. So taking that into account will be very opportunistic in terms of acquiring some ABDA in place of doing exhibit batches for new products and stuff like that. So that's what we've done the last year. We are actively working on another one right now. Hopefully that should get over the line in the coming weeks.

Sure. Thank you so much, Anandas. Thank you.

Thank you. Participants with questions may enter star and one on your handset. The next question is from the line of Chira from MS Capital. Please go ahead.

Hi, good afternoon. Thank you for the opportunity, and congratulations, Rizik, Chairman, sir, for a strong set of numbers. I just wanted to first ask a question on the Central American, Latin American operations, and we have the chance to hear from Ashokji, and also, if we can just elaborate a little bit on the operations in that region. And a couple of annual reports ago, we heard that we have almost 14,000 daily touch points. How much has that grown to? We also believe that there's a split between, you know, smaller wholesalers, around 60%, direct pharmacy 20%. Could you just overall give us a view of the operations in the Central American market, if that's possible? Yeah.

Yeah, thank you. Yeah, we, every time we open a new country, obviously, the number of points that we touch actually increases. So, we opened Chile this year in a very big way, and obviously, so, there are four big chain pharmacies in Chile, and on top of that, 30% of the pharmacies are also independent. So, we obviously do not reach all the independent pharmacies right now through our own sales team, but we reach them through a distributor that we sell to, and I cannot give you an exact number on how many points we have grown by. But what we are doing is, as I said, our self-space in these individual pharmacies that we sell to in Latin America is about 41%. What we are trying to do is strengthen our self-space to get to 50%, 55%, where we are completely indispensable to these pharmacies. Does that answer your question?

Yes, that was helpful. And Ashok, if you can also sort of give us a little bit of an understanding on what proportion of our customers would be still distributors or middlemen, what proportion would come from pharmacies, institutions, or smaller wholesalers?

Okay. So in the whole of Central America, the business that we do, by 18 to 20 percent is institutional, which is government. The rest is completely private market. So what we do have to do in Central America, in these countries, is you have to have two co-distributors at least so that they reach to those pharmacies that cannot fill in the ticket, everyday ticket sale, which is, let's say, we only do around about 300 products. A pharmacy that does, let's say, a sale of $150 per day cannot buy all the 300 products, though they have to buy through our co-distributors. So, you know, each of these countries, we have two or three strong co-distributors. They sell around about 10 to 12 percent of our sales, and the rest of it all is us going directly to the pharmacy.

Understood. You said 10 to 12% through those distributors?

Yeah, 10 to 12% of our sales is through the co-distributors, and 20% through the government, and the rest is all directly to the pharmacies. And when I say the rest, it also includes the same pharmacies also.

Understood. Very helpful. Thank you. The second question is just doubling down on a previous participant's question on the receivable days. I understand that a part of that is just effects change between the time the sale was booked and I guess the closing of the books. And that still brings us down to 125 days, which is… At least 25 days higher than what we have seen in the past. Is this how we think the new normal would be? And is it a strategic call? Or how do we understand that?

Yeah, so, Chirag, in the past as well, we've been giving the messages out that we are comfortable with somewhere around the 100 to 120 days range. Now, we are still within that range pretty much, you know, but as CFO and Sheldon were saying before, we've entered into a tender in one of our Central American markets, a very highly profitable tender, by the way, where we needed to make sure that the supplies were done within 60 days. So, and it was a fairly large tender as well. So, those numbers sort of moved it up by five, six days. But typically, I think we are happy to be anywhere between the 100, 110, 120 days.

And that's a sweet spot for us.

But the larger picture that I want everybody to really see is we've been consistently able to invest hundreds of growth into our own CapEx, our own distributions, and despite all of that, we are still increasing our reserves and surplus by a considerable number every year. So you can imagine that even if we do see another five days or 10 days increase in the future, we're going to be okay with it because when that money comes in, more often than not, it comes in at a higher exchange rate compared to what it was previously, right? So the cash flow, I would say that we are benchmarked amongst peers. We are probably the most other companies in the same segment. So we're not worried about that. Anywhere between, like I said, 100 to 130 days even is probably still okay for us going forward. Yeah.

Just to add to what you suggested, our history of writing off dates has been virtually negligible and close to zero. We have not been adding any bad dates in the past which did not recover. There is only a delay but not writing off. And most of these receivables now attributing to higher number is from government. So for sure it will not be received, give or take two weeks here and here.

Thank you so much. Thank you. Thank you. Thank you.

Thank you. The next question is from the line of Richard from Equity Masters. Please go ahead. Thank you for the opportunity.

I hope I'm audible.

Yes, ma'am.

Yeah, my question was, you know, my question was on, you know, what's happening around the world, the Middle East tension. I know that's not your core market, but, and, you know, being closer to the customer helps to overcome the short-term disruption. But how do you think, if at all, this could affect the business or margin or prices, or maybe because of economic slowdown in the end geography, if it could have any impact on your business and any vulnerabilities that you may want to highlight?

Yeah, I would like to actually give an answer on this. In fact, if you look at our past business, we, in fact, we increased the business, our profitability and everything actually went up only during COVID time, after COVID and during COVID. So what is happening today, as our Prime Minister said, is something closer to COVID. So we all have to actually follow the frugal ways and we started advising. It's very, very correct. But as a businessman, we should not allow the crisis to go waste. And how we are managing it, as I told you before, for the next six months, we don't have to produce any products that we have to sell in the market in Latin America. And the same way, even in our U.S. market, the goods are already available there in the U.S. warehouse. In addition to the six months, we have also bought raw materials. Yes, there are some increase in the prices, but it's not going to impact as the reason being when the prices go up. If you have already agreed actually to a price to your customer in the form of a B2B business or an LP, then of course what happens is you know you will have to honor the commitment and then that's how you lose money. In our case, we are selling actually through our own actually subsidiaries, through our own warehouses. So that's not going to create any major impact to our business. On the contrary, this will open up the opportunity, the reason being A. These smaller geographies where we are today in Latin America, the big players are only into brand marketing. I'm talking of multinational. Second, small companies, they don't have anything in the form of actually stock and sale. They all actually sell it to some importer. So, they will be very worried if they supply to the importer, they may or may not pay. The reason being, most of the transactions today happen from today. Nobody actually pays cash for a generic. But if you have your own warehouse, if you have people, like I know we have more than 700 people working in the whole of actually Latin America. So, it helps us to collect the money. We are there for the last 20, 20 years, 20, 22 years. And coming to currency crisis also, Guatemala is very stable. There is nothing in the form of no fluctuation in the currency. And coming to Nicaragua and Honduras, maybe slight fluctuation in the form of 3 to 4%. The rest of the markets like El Salvador and then Panama, Ecuador, the currency is dollar. So, it's not going to create any issue. Costa-Lican currency also stable. Chile also for the last 4-5 years, the currency is stable. Is there anything else you want me to answer?

Yes, thank you. Thank you so much and all the rest.

Thank you, madam. Thank you very much.

Thank you. Participants, if you have any questions at this time, please enter star and 1. The next question is from the Lion of Prince from Family Office. Please go ahead.

Thank you for taking my question. I have just one question. So going forward, can the company maintain around double-digit revenue growth rate and the Fed margin between 25 to 29% consistently during the year by 27, 28, and 29?

Yeah, so as I explained previously, we remain very confident that the business will continue to do well. We need to be patient for the next one to 18 months at least, because there is a period of stabilization in pharmaceuticals. Always what happens is there is... I'm getting an echo from someone's mind.

Prince, if you're lying on handset or the speaker mode, would you please switch it to the handset?

Oh, yeah, yeah.

Thank you.

Okay. So, with all things, when it comes to pharmaceuticals, especially the regulated markets, things take a lot more time because your product development to approval itself takes around two years plus. So, as we enter into the larger markets of Latin America and the U.S. itself, things are going to take a little bit longer. But once it starts, you know, rectifying, I think it will be a very sticky business. 18 months and beyond, we feel that these numbers are going to get back to what they were before. I'm talking about Latin America. What we are seeing today in terms of the bottom line is, please take into account that we have certain segments of our facilities that are not breaking even. Yes, if you're talking about our API unit, and if you're talking about Ameris-Cleanic, which is basically completely back-end integration. So, despite all these drags on our bottom line, we are still looking at 27-28% PATH and 38-39% EBITDA, which, in my opinion, at least from whatever I've seen in our size segment, nobody else has these numbers. So, with all these drags, if we can continue to maintain these numbers, you can imagine that, you know, 18-24 months beyond, these are going to be definitely maintained at the same level or potentially even inch up a little bit. So, I hope that...

Thank you, all the best. Thank you. Thank you very much.

Thank you. The next question is from the line of Ahmed Mada from Unify Capital. Please go ahead.

Yeah, thanks for the opportunity again. Just one question on forex gains. Can you quantify what was the gain on foreign exchange booked in Q4 as well as for financial aid, if CFOCER can help?

The, the, the unveiling is to be to be to the order of, uh, For the year as well, we have had about 20, 21% of the day-laced gain over the year. The remaining about 40-50 crores will be run-day-laced gain, which is reflecting in the receivables.

Out of 116 crore other income, both numbers will be roughly 4x gains for the full year, if you can use just one number.

We can even write that to you, Amit, so that we don't take everybody's time. Yeah, no problem, no problem.

Just as a question, considering the answer on the volatility part, but considering the volatility in RM costs in general, obviously a lot of forex volatility. And assuming we are net beneficiary of the INR depreciation, but overall, considering everything, are we able to manage the current supply chain, raw material volatility, or has there been any issues? Considering we have a fair amount of dependency on China, how will you judge the current situation, if you can give some remarks on that?

Go ahead, sir. Now, our business in the form of outsourcing is much lesser compared to actually what we used to do in China and all. There was a time it was more of a natural hedging. Now that, of course, I think it's in the region of 25-30%. And coming to the volatility, see, the global economy is drowning in debt rather than water. That, of course, you know, that will happen. But coming to us... What is happening to big companies need not happen actually the same way to a company where their fundamentals are unique or the business model is unique. If you try and do something which is unique, then, of course, you will not allow this crisis to go waste. That's what I told before also. Prices are going up, no doubt. Definitely, it's going to go up also. When it happens, it is the model that makes actually, you know, you to make money or lose money. The moment we understand that the price of a material which we bought is higher, we also actually design the price at which we have to sell the product in the market. That's why we don't face any major issues to Tehama's purchase.

Yeah, and just to quantify, obviously, you know, with regards to input materials like glass and plastics and all of those things, we keep getting, you know, increases from suppliers, but of course, we fight all of them back and then try to rationalize it to the lowest amount possible, but just to give you an idea, the highest impact product for us that we have been

doing, especially for the U.S., is less than one and a half to two percent.

The calls I'm talking about that's gone up by, you know, so we haven't yet seen any major negative impact in the form of

input materials going up significantly.

Thank you.

The next question is from the line of Pawan Kumar from RK Capital. Please go ahead.

Sir, can you comment on the CAPEX that is expected in ASA 27 and 28, and what would that be spent on?

Yeah.

When it comes to CAPEX, the residual CAPEX that we

have is the phase 3 of our intakeable plant. We call it internally as COL2. And also two other ones, which is we are constructing a much larger capacity oral solids and derma facility in Poticherry next to what we call our CP1 plant or resisting plant. And thirdly, we also will be completing our oncology API plant. In addition to this, we are drawing up plans for our building in Mexico.

That should happen sometime by Q3 or Q4. I mean, it will start by Q3 or Q4.

When it comes to exact numbers, see if any numbers you can shed some light on.

Yeah, as I mentioned during my opening remarks, also out of the end-stage CAPEX plan of close to 1000 crores, 510 crores remain to be spent. The rest have been spent, they are raised in the form of CWAP. The CAPEX station is RM50 crores, and RM43 crores are still WAP. And the trade advances to the extent of 109 crores over various lines that are being imported. This leaves to about 500 crores. It can vary. The 510 crores will be sent over the next 824 months. This is a plan as of now. I have suggested this does not contemplate the inorganic growth, it does not contemplate Mexico, it does not contemplate the Chile warehouses and the quality control lab, which we are planning right now. These are all not even asking for the drawing table right now. So once we get some clarity, probably we will update in the next quarter. So, 510-4 for sure will be the amount that is already identified and will be spent in the next 18 in the format.

Thank you. Thank you.

Thank you. The next question is from the line of Julie Mehta from 361 Capital. Please go ahead, ma'am.

Thank you for the opportunity. Firstly, congratulations on a great set of numbers to the entire team at Kaplan. So, I have a question. It caters to the U.S. business. So, the U.S. business has now picked up decent scale and size. So, if you want to understand the growth breakup, how much of that would be organic and how much do we still have to account for through the new launches, be it the ones coming in or the pipeline, although ANDAs that we are yet to acquire. And if you could also, you know, share the EBITDA margins for CSL for 4G and FI26.

Okay. So on the breakup in revenue, I would say that more than 90% of the revenue has come from the older products that were already in the market. So the 10 angles that were approved over the period of the last 12 months, we've launched a couple of them, but the majority of it, especially the larger ones, are in the process of getting launched in the next few weeks. So, in addition to that, I would also suggest that 15 ANDAs that we acquired from outside, we are in the process of launching them, which will only happen this year. So, you can assume that, like I said, around 90% of all the growth that you've seen is from products that were already launched in the market. This is actually a good statistic as well, because when most other companies, I think, are somewhere in the region of, you know, their average earnings, and I believe, if I'm not wrong, is somewhere around 800,000 to a million, whereas ours is almost twice that number, more than 50% higher itself. And of all the products that we have approvals for, we were just discussing about this yesterday, literally just one product is the one that we've technically taken off the market because there were no sales. Every other product continues to show good sales, and we continue to receive repeat orders. And when it comes to the EBITDA margin for CSL, I request Satya to answer this.

Thank you. Thanks for your question.

The idea of CSL for financial year 25-26 is 142 crores, which is 30%, as compared to 102 crores last year, which is 27.9%.

Okay. And so further, 4Q, what if you could get your special numbers for 4Q?

Sorry, can you please summarize? Thank you. For the fourth quarter, you are asking the data?

Yes, sir.

Yeah, it is 33%.

Okay, that's helpful. And the last question is I may see them. So, also, since you are almost on a last leg of CAPEX now, so do we have any plans for CAPEX going forward in the next quarter period, or will there largely be maintenance and nothing that's major?

No, so as we just discussed, we have taken on close to 1,100 crore of CAPEX, of which 50% is done, and then other 50% will be completed in the next 80 to 24 months. This doesn't take into account the ones that we are going to be planning in Mexico, Chile, etc. So, yeah, there is still a certain amount of residual CAPEX that needs to be completed. In addition to that, I will just give you some statistics. Last year, we were able to add close to 400 close to our surplus, right? That is over and above what was spent in terms of CAPEX. So if you were to do some numbers over the next 1824 months, you can assume that despite the CAPEX that we will be putting up, the likelihood is that our reserves and surplus will continue to rise even further.

Okay, for that's very helpful. Thank you.

Thank you.

Thank you. Ladies and gentlemen, that was the last question. I now hand the floor over to the management for closing comments.

Thank you to 361 Capital Market and Rohit and Julie for conducting, and thanks to everybody that took time out to attend our call, and we hope to stay in touch with you in the future as well.

Thank you very much.

Thank you very much.

Thank you. On behalf of 361 Capital Market Private Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines.