Poly Medicure (NSE:POLYMED) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Poly Medicure Limited q one and FY twenty seven earning conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask question after the presentation conclude. Today on this call, we have with us the senior management team of the company represented by mister Himanshuvit, the managing director, mister Rahul Gautam, president, strategy and corporate development. I now hand the conference over to mister Himanshuvit. Thank you, and over to you, sir. Yes. Good evening, everyone, and I welcome you to our quarter one FY 'twenty seven earnings call. I sincerely thank all of you for being here today.

0:48 Before I come to number, I want to give you a glimpse of our strategic vision 2030, and we're calling this as a POLYMED 3.0. As you all know, POLYMED initiated operations in 1997 with an IPO of INR 2.65 crore using which we set up our first plant. In the next twenty five years, we remain bootstrapped and slowly build our leadership in our core infusion therapy business by painstakingly building global quality products. During this period, business grew from zero to almost INR 7,000,000,000 in revenue. In 2021, Poly Medic started 2.0 journey, which we call the inflection point in our history of the company. We did our first institutional fundraise, which resulted in multiple expansion of capacity. We also entered into high technology segments like cardiology, critical care, orthopedics. During this period, we also started our inorganic growth journey with acquisitions of PendroCare and CDF.

1:46 Revenue during this period almost went up by 2.75 times to INR $18.75 in FY 2026. Starting FY 2027, we have initiated Poly Medic 3.0, a failure of calling Ascent. During this period, we have set a goal to double our revenue by FY 2020 by unlocking value via organic and organic expansion, leveraging technology to scale high complexity verticals globally and deepening direct customer access, especially in international markets. I believe we are at a point of time in our journey where growth should happen exponentially led by high technology, high margin segment. Given the strength of our balance sheet where we continue to have strong liquidity, we believe this audition goal is truly achievable. I'm really excited about this phase, which I believe will truly make Poly Medicure Global MedTech MNC out of India.

2:35 Our leadership front on the leadership front, we have already initiated actions to achieve our Poly Medic 3.0 vision. We have appointed Indranil Mukherjee as our CEO for India and APAC, Renato Rocca as CEO for Brazil Indoreen has joined the company on 06/01/2026 Renato has joined the company on 08/01/2026. We also brought in Abhiwani Huda as the Head of Renal Business in India to augment sales and also build a strong capability in this segment. I believe our leadership reinforcement will help us to put a strong position to deliver on our aspiration. Moving on to financial performance of the company on Q1 financial results. On the financial performance side, let me start with the stand alone performance as this remains core for our group. Stand alone revenue for Q1 was INR $4.31 crores, up 12.3% with domestic at INR 146 crores, giving a growth of 16.2 and international at 281.8 crores, giving a growth of 10%.

3:41 Gross profit for Q1 was 71.5% showing significant improvement due to better product mix and impact of price hikes implemented in Q1 and inventory gain. I expect that our gross margin should continue to reflect on historic margin trend of 68% to 69% in the near term. We have guided our standalone EBITDA margin of 25% to 27% for FY 27%, but we have delivered 28,100 bps higher than the guided range. Absolute operating EBITDA was INR120.8 crores, up from 18.8% on a year on year basis. This was despite employee cost rising almost by 29% driven by 35% increase in minimum wages in Ariana with effect on 04/01/2026 increase in headcount as well as impacting increment for FY 2027.

4:34 Now on the consolidated picture, consolidated revenue was INR $5.25 crores, up 30.3%. Of that INR 72.3 crores came from acquisition. So on organic basis, revenue was INR 453.1 crores, up 12.4%. Within International, Europe grew 43.8% to crores and importantly, it grew 17.6% organically, reflecting improvement in the performance in the region. As you know, last year, Europe was a laggard and this year as we have added some customers, onboarded new customer, we were able to come back to our original growth or planned growth of 17% to 18% as we had forecasted in the beginning of the year. Rest of the world grew at 30.3% on reported basis or only 4.0% organically.

5:22 The reason for low growth was 32% regrowth in The Middle East due to ongoing West Asia crisis. Customer demand in Asia is intact, but given the current logistic and infrastructure bottleneck, we are unable to meet that demand. We are hopeful that once the situation improves in the region, we will return to normalcy. Our order book is pretty strong for Middle East, but currently, we are unable to ship the products. Consolidated gross profit was 85.6 crore at a margin of 73.4% margin, up four ninety five basis points. The better margin profile of the newly acquired business is helping improve group's gross margin. Consolidated operating EBITDA was INR 126.7 crores, up 17.7% at a margin of 24.1% with our guided range within our guided range of 23% to 25% for the year.

6:13 Infusion Therapy grew by 11.1% to INR259.2 crores led by strong domestic growth on back of rising share of higher value added products and price increases. Internationally, we have started to witness a strong recovery in the business despite 32% rego in the Middle Eastern market. Orthopedic contributed INR 49.2 crores, which reflects the consolidation of CTFE. Card division grew from INR 2.9 crores to INR 28.6 crores, led by Pendockel acquisition together with genuine scale up of domestic business. Others grew by 18.5% to INR 149 crores constituting the balance. The one soft spot was renal, which degrew by 3.8% to 43.2 crores. The renal business was impacted by continued pricing pressure from Chinese players in India, but we made a conscious choice to raise prices to push the raw metal price increase rather than different volume at any cost. Separately, there is an important development based on application filed by the company. The government has initiated anti dumping investigation into reports of dialyzers from China and Malaysia, and we have claimed for injury margin of twenty percent. And we hope that in the next few months, we will see some decision taken by the government to protect local industry.

7:30 On the balance sheet front, the liquidity remains strong and with a cash of about INR $8.55 crores, which is the reserve we have set aside for strategic initiatives. And if we connect this to our forward looking guidance for FY 2027. Before this, I would also like to point out that company has been now pushing hard on the developing new medical devices. And for that, we have also initiated a lot of clinical studies. And as a support, Government of India has also granted an aid of around INR 3.3 crores for undertaking clinical studies of some new critical devices we have just recently developed. On the guidance front, on the consolidated basis, we are guiding for revenue of 2,300 crores to 2,400 crores, including the full year consolidation of Penrong Care and GTF. We are maintaining this guidance after quarter one. On stand alone basis, we maintained revenue guidance of INR 1,900 crores to INR 2,000 crores with the domestic business expected to grow over 20% and international business growing by over 15%.

8:30 Stand alone EBITDA margin is expected to be between 25% to 27%, Though currently in the first quarter, we went 28%, but still we think that maybe for the first quarter, the margin was slightly higher because of price increases we have taken and some inventory correction. But hopefully, we should be in the higher range of 25% to 27%. With consolidated EBITDA margin expected to be in the range between 2325%. This quarter, run 24%, so we are pretty much in the range and hopefully we can maintain this. We expect to spend between INR 200 crores to INR $2.25 crores in the CapEx for FY twenty twenty seven. In summary, this is a quarter where the strategy started converting into numbers. The high technology, complexity segment we invested in through Polymer two point zero are now generating the value we anticipated.

9:19 I remain confident in the direction of the business for the year FY 2027. Thank you very much for your trust and time. I will now hand over to operator and we'll be very happy to take your questions. Thanks again, everyone. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. If you wish to remove yourself from the question queue, you may press star and two. Participants are request to use handsets while asking question. Before we take the questions, in order to ensure that the management will be able to address all the question from the participant, we request you to kindly limit your question to two question only per participant.

10:06 If you have a follow-up question, please rejoin the queue. First question comes from the line of Abhayag Gandhi with Bajaj Alternate Investment Managers Limited. Please go ahead. Yeah. Hi. Thanks for the opportunity. Hope I'm audible. Yes, sir. You are. Yes, sir. Yeah. Yeah. Just wanted to understand on the stand alone business, we are looking at an absolute revenue of closer to $3.50 to 400 crores, whereas in q one, we have grown closer to 12% on the stand alone business. So if you can just help us tally the number in terms of absolute revenue, $3.50 to 400 crores, where exactly are we planning to get there?

11:06 Yes, that is question one. So you mean the incremental growth of $3.50 crores to 400 crores, that's what you mean? Yes. Yes. Yes. So I think our quarter one tends to be the lowest if you look at the history of the business, and it tends to grow as we go into the financial year. This year, because we've also taken a price hike, right, at the beginning of the financial year to account for the increase in raw material prices. The beginning of the year was slightly slow, and we recovered some of the revenue in the later part of the quarter. As that momentum continues, we believe that we should be able to get to much better numbers in Q2 onwards and still achieve the guidance that we've given. Got it. Fair enough. And sir, the second question is regarding the inorganic acquisition. We are closer to INR $8.50 crores in terms of cash. If you can throw some light, what exactly are we looking out for? Are we going to utilize the entire amount of INR $8.50 odd crores or how is it? Yes, that is question two.

12:10 So basically, we are looking at expansion organic and inorganic. And as we have done a very small acquisition in Brazil recently, we are trying to put our presence there and we have Board has also allocated some funds for Brazilian market where we can expand with direct sales presence. And of course, we are looking at technologies around three critical businesses in cardiology, oncology and orthopedics, and we're looking at adjacent technologies and wherever we find an opportunity, we will look at that. And some of the funds are also allocated for the CapEx to be done at two plants, which are under construction at this moment.

12:55 And one is coming in Polyvance in Faridabad and then one in Noida basically in the medical device part. Got it. Would you like to share some asset turns for the CapEx that you're planning? The asset turns for us, if you look at the cost, remain between 1.2 to 1.4. And we expect on a balance sheet, this similar kind of asset then to continue. Okay. Fair enough, sir. Thank you so much. I'll get back in the queue. Thank you. Thank you. Our next question comes from the line of Siddharth Niganti with CWC. Please go ahead. Hi. Thank you for the opportunity. If I look at our India growth ex of regional plan, I'm assuming all of regional was India, then that is 27%.

13:48 But overall, infusion growth was was much lower, right, around 11%. So what was the one that drove in... What was the therapy that drove India growth, if you could give us some understanding? And on on the disruption that you've seen in ROW exports, right, given that this is really, at some level, an essential product, have you seen the resumption of exports in Middle East, or are you still envisaging this to continue until the the conflict settles? And the third one is, you know, do we expect further RM cost impact in q two, you know, versus what we've seen in q one given your inventory levels? I know you've taken certain price increases, but how should one think of gross margins in q q two? Yeah. These were my three questions.

14:44 Yeah. No. Thank you for these questions. Let me take the first one, which is the segment which have driven the growth for us domestically. Right? As you rightly said, our Infusion Therapy business has grown at about 11%, and this reflects the performance both domestically and internationally. On the domestic side, Infusion business has actually grown 20% -plus for us in this quarter. The other segment which have grown for us is obviously cardiology, critical care, two segments which we have recently initiated, and those are contributing to growth quite meaningfully in this quarter. Your second question, can you... So on the second question, the supply chain on the shipping are still are disrupted right now. If you look at the shipping schedule, shipping schedule is still disrupted for Middle East and it's still hard to find containers, which can go to Middle East ports.

15:46 So still the disruption continues. Hopefully, in coming weeks, we made something easing out. But on the demand side, see still it's an intact demand we have ordered from customers. They are piling up at the ports. But unfortunately, the ships are not calling, so they are stuck up at the ports. So that's the issue. On the price side, I think currently as crude stays where it is, think we don't see a major impact on nominal cost, a minor few percent here and there, but more or less, I think probably we have, you know, almost seen that peak off. Right. And and just on the acquisitions, any update in terms of how the integration is going?

16:34 You know, how are you thinking of of any any integration in terms of cross sell or the movement of some of that production back to India? Just some updates on that. Sudhat, I think we are quite happy with the way how the integration process is going on for both the acquisition that we've done. We have clearly identified areas of benefit that both the companies see with each other. We have created a group, which is continuously following up on all of these synergies. This includes across the cost items as well as on the R and D side, plus the sales velocity that we're trying to increase.

17:21 So on an overall basis, we're very happy on the part of moving the manufacturing process to India. We are currently working with both vendor care and CTAF on that part. Given this is a regulated sector and any such process change needs to regulatory approval, some of these processes currently are at the regulatory approval stage. Got it. Rahul, have we already started seeing some cross sales synergies? Or is that going to be more later in the year? I would expect some of this to start playing out from next financial year onwards because, you know, all of these, you know, even medical devices is a regulated sector. Any new market that you want to open up, like even for India, if you want to bring those products into India, we need to take the approval from the CDSO and that process is on. So I would expect that to, you know, start be visible from next financial year onwards.

18:17 Got it. Got it. Thanks. Thanks a lot. Thank you. Reminder to all the participants, kindly limit your question to two question only per participant. If you have a follow-up question, you can rejoin the queue. Our next question comes from the line of Raksha Srivastava from Normalia Financial Services. Please go ahead. Can you be louder, please? We can't hear you. Participant has left the queue. We can move forward to the next participant. Our next question comes from the line of Bharat Sisha with BCS Capital IDS Private Limited. Please go ahead.

19:10 Yeah. Hi, Himanshu. Yeah. Good to see the hunger for the growth is enunciated in POLYMED three point o. So the first question is, we have said we want to double the turnover and margins to be the industry leading margins. And the growth will come both organically as well as inorganically. So when you say 2030, I presume it is March 2030, so four years, right? Yes. Okay. And that means doubling will mean about 18% compounded growth in the four year journey.

20:01 Any That's right. So how much of that is counted as organic? So, Bharaday, if you see current the current our company does around 80% organic business and 20% inorganic business. And I think we probably continue or have a similar run rate. Okay. So about 14%, 15% domestic sorry, organic and 3% to 4% would come from acquisition. So a trajectory basically. Sure. And by industry leading margin, I presume much better than what we have outlined for the current year. But what kind of margins should one assume on that?

20:51 Bhagavad, this is Rahul. If you look at the margin profile of POLYMED today, we are already the flag bearers in terms of profitability across the industry. I think we have the ability to improve our margins even now. But given we are focusing on growth in the near term, we want keep the margins in the similar range. Currently, obviously, margins have been between your guidance for 25% to 27% margin. We expect that we should close this year with upper end of that guidance range. And as the scale happens, we should be able to increase that margin as well. But given we'll be reinvesting back in the business, from a modeling perspective, assuming a similar kind of margin will be a reasonable assumption to take.

21:37 So similar margins, but not lower, right? Yes, that's correct. Okay. Himanshu, I'm just trying to understand, When we look at somebody like Merrill, which is doing a lot of cardiology related business Yeah. The scale up is really the margin side. The scale up itself has happened at a pretty rapid pace. And the margins also are quite impressive. So, you know, I I was just wondering what what kind of opportunities we can hunt around because this kind of margins and the rapid scale up in the business.

22:34 What your own thoughts and your observation? So, Bhartava, Merrill started the cardiology business around fifteen years ago. So it's not something that they have started new. They had started this business almost fifteen years ago, developing products and Polymers was never in that space earlier. And of course, we still had great margin profile between 2527%. And we have started cardiology only two years ago and that's how we are building it up, taking developing products. As I just told you, we have given a grant of INR 3.3 crores for clinical studies in India because these are a lot of these are import substitution devices. So that's been our focus. And as we move up, regulatory pathway is very important because that needs time and it cannot be like that you build a product and you can start selling tomorrow.

23:26 So it's all about regulatory pathway, clinical studies. So we are building this up. And I think in the next two, three years, you will see a lot of new products coming from our portfolio on cardiology side. And I think that's the journey we need to take. But let's not forget that we have our global excellence on infusion of vascular access and we will continue to build that globally also. So we have a cash cost, we have a product which works very well for us. So we'll continue to build there, but we'll also continue to invest in this new area of orthopedics, cardiology and critical care that will help us to actually grow business in India and internationally in near future. Okay. And just one last thing. Last year, in many ways, it's been a bit of a tumultuous kind of a year where many imponderables kept coming in.

24:27 Many of them outside your control in the external environment. Today, as we stand and with some of the acquisitions that we have done with the plants and the capacities in place and some of the new categories established. When you look at the 2,030 reason that you have spelled out, what in... What are some of the very positive points you gave in your mind, and what are still some of the challenges that you visualize? Barbara, it's a long question, but I'll try to answer in a short limited time. So one is, I think on the opportunity side, India happens to be the best opportunity in my view because now POLYMED brand is very well known. Today, we are present in almost every corporate hospital in the country or every modern hospital.

25:27 So most important thing will be to deepen that relationship with those hospitals and start working more aggressively and putting more products out there. So I think that is number one priority. Number two will be Europe, where we continue to expand and our business and continue to go as a go to market direct strategy. We currently present only in Italy, so we want to go maybe three or four geographies we want to go direct. So that's a very important part of the strategy. And as we just hired a CEO in Brazil, so we'll also put a strategy there to go to directly with more new products than newer range we have today. So currently, our distributors only sell our existing products. For new product ranges, we will want to go direct.

26:14 And so that is on the product side, market side. Product side, anywhere, we are going to launch 25, 30 products a year, so that's already in the pipeline, is already happening. I think challenges is probably the geopolitical risk, which I see. U. S. Uncertain because of every day there is a new situation, which is coming up. Middle East, hopefully, war kind of settles down so that the market to resume and we are able to resume the flow. And also the logistic costs, which have actually gone up substantially two, three times in the last six months. I think they will have to come down for India to remain competitive in exports. So these are some of the things which come to our mind, Bharat Bhai. Sure. No, thank you, Himanshu, and all the very best. Thank you, Bharat.

27:05 Thank you. Next question comes from the line of Deepak with Sundaram Mutual Fund. Please go ahead. Yes. Thank you for the opportunity. Am I audible? Yes, please, please go ahead. Yes, yes. Good afternoon, sir. So congratulation on delivering a resilient set of numbers. I had a couple of questions. So first on the acquisition, sir, would it be possible to call out, let's say, in euro terms, what was the Y o Y growth of PendraCare and ZTF and EBITDA margin for this quarter? Deepa, I'll have to separately touch base with you on that. I don't recall that number immediately. Okay. And sir, second, if I look at our exports growth, ex of acquisition in Q1, roughly as per my calculation, we have done somewhere around 10% to 11%, which denotes that in nine months going into this year, we would have to clock more than 15%.

28:02 So just wanted to know your thoughts around what will drive this organic export growth in the next nine months? And what's the growth outlook for the renal segment since in the PPT, you mentioned that we are facing some competition due to Chinese dumping? On the export front, I think for us, Europe, again, because we have done some new customer acquisitions, so that seems to be the growth market for us this year. And Southeast Asia is also doing very well. So I think these are two markets I'll call out for the moment. U. S, yes, we are growing, but we don't know what's going to happen if we have 100% tariffs tomorrow or today nine, I don't know. So it's pretty fluid situation regarding U. S.

28:49 These are the two important geographies will continue to grow. And I think once the situation medallates improve, I think we will see probably maybe more than 20%, 25% growth from Middle East. So currently, everything is tall and all the orders are still lying on core soil factory. So I think that is something we are looking at. And so export growth should happen, there is no reason should not happen and we're pretty confident. And we have almost 25 new products in pipeline for CE marking, which should come sometime between now and next three to four months. So that will also add to the bucket for increasing the basket for exports. Second question was on renal segment growth outlook. Pardon me for that. So the renal side, I think we had a big growth of around 3% in the first quarter. But I think, again, we have as we have maybe my earlier comments, you must have heard about government opening our anti dumping program because we were pushing the government to look into the pricing, which was dumped by Chinese and most of the Chinese companies are importing it only as zero duty using the ASEAN FDA.

30:03 So I think even they were yesterday there was a minister's meeting and we've also flagged that issue, again to the minister, Mr. JP Nathal. And with this, I ended up being proved getting evaluated right now and with an injuring margin of twenty percent, we think that something will happen between now and end of the year. So that's number one on that front. But secondly, we have hired Abhinav Uda, which you must have heard in my opening comments. He comes from a strong renal background and probably that will also help us to turn around and work with distribution partners in the country and outside the country to grow that business. So hopefully, at year end, we should end with a growth of around 15 to 18% in the business, maybe close to 20% depending on how it goes, but we are pretty confident of this growth in spite of all the challenges we face today.

30:53 Okay. So that's very heartening to hear. And sir, lastly, if I look at our gross margin, this quarter, we have reported multi quarter high gross margin. I understand that you also mentioned that we have taken some price hike, which could have helped us to rate in this sort of gross margin. So let's say on a steady state basis, at least in the near term, let's say, the nine months of this fiscal year, how should we look at the gross margin? Should it normalize to that 68%, 69%? Or will it continue to clock above 70% rate? See, basically, on a stand alone basis, we should see between 67% to 69%. This is what we have called out also earlier. And also on the that's a consolidated, we should see further maybe 200 bps, 300 bps improvement because Pendroc and Chedia operate on a higher gross margin. So they probably at the end consolidated numbers will be between 7172%, whereas Chattabur should look between 6869%.

31:53 Okay, Very helpful and all the best. Thank you. Thank you. Next question comes from the line of Rashmi Shetty with Dollar Capital. Please go ahead. Yeah. Thanks for the opportunity. So again, on the margin front, on the console level, you know, overall gross margin, you said it is in the range of 71 to 72%. But on the console level, our other expenditure and personal cost for this quarter is pretty high. So on an annualized basis also, it would be a similar run rate of around 24% of sales in the subsequent quarter? Yes. So, Rashmi, as you mentioned, our guidance for consolidated EBITDA is between 23 to 25% and we are maintaining that guidance.

32:44 As you rightly noticed, the people cost and other expenses are higher in case of our acquisition that's reflective of the nature of the business plus the fact both the businesses are currently scaling up. And that's why our consolidated EBITDA margin guidance is lower than our stand alone EBITDA margin. Okay. And on sales front, our if you just compare organic and inorganic sales for this quarter, inorganic is around INR 73 crores in the export business. So what I understand that given whatever CY25 sales you have given for the acquired companies, And if you convert it into the, you know, euro INR currency, then we have not seen... We are just integrating. Right? We have not seen any major growth in the acquired companies that is in the inorganic companies sales. We have not seen the pickup yet.

33:42 Am I correct on this part? Yes. So basically, you have to break it down into two parts. PendraCare and CTF are two different entities, both having their own set of growth journey. For PendraCare, as we highlighted in our last call as well, they had over indexed exposure to Middle East of about 20 odd percent. So that business is actually currently not growing. In fact, we've tested degrowth over last year as well. CTF is growing as per expectation in mid to high single digits. And as the synergies kick in, we should be able to increase that further. Okay. So in the coming years, what is the kind of growth we are assuming in case if Middle East problems get resolved for FY 'twenty eight from the acquired company?

34:36 Yes. So I think on a long term basis, as you called out earlier in our acquisition cost as well, these assets on the stand alone basis have the ability to grow in high single digit revenue growth. With the synergies that we want to drive in through product development, cost reduction as well as through sales channel expansion, we wanted to go into the mid teens as an aspiration basis, assuming the current geopolitical situation results itself over the course of next few quarters. Okay. So is it better to assume that from next year onwards when the sales pick up and when things get resolved, we will be able to see the overall EBITDA margin, including this acquired companies to expand at least 100 to 150 basis points?

35:30 We haven't given any guidance like this at the moment. So, Rashmi, I won't be able to comment. But directionally, as these businesses scale up and the synergy benefits kick in, we expect the margins of these entities to improve, which will reflect in the consolidated EBITDA margins as well. Okay. And last question, just on the gross debt figure, if you can give that figure and what are the kind of repayments you are expecting this year? Yes. I mean, POLYMED stand alone does not have any debt other than the working capital debt. Yes, working capital. Yes. So that amount is about INR $2.50 crores, which is a revolving credit. Our interest subsidiaries, again, Penrarche does not have any long term loan.

36:19 For GTF, the total loan is about INR 9,000,000, of which about INR 1,500,000 to 2,000,000 has to be repaid every year. Sorry, how much INR 1,500,000 to 2,000,000 to be repaid every year. Okay. Thank you. That's it from my side. Thank you. Thank you. Next question comes from the line of Siddharth Singhanti from CWC. Please go ahead. Hi. Just a quick follow-up on on what you mentioned to Bharat by regarding the overall growth aspirations. So if I have to look at a 15% growth on the f y twenty six f y twenty six figure, right, that gets me to 3,000 crores out of a total of a total of what we may have, and the remaining will then come from plus plus any new acquisitions that we make. Is that the right way of thinking about that?

37:33 So so that you can help me where are you doing the calculation. Once you're looking at stand alone numbers only, then you could also add San Juan Health into that. So what I'm looking is $17.50 crores excluding Pentacare and last year. Right? Okay. Which at 15% for four years gets me to about 3,063 crores. Right? The overall Sorry. Don't understand because we've guided for a two x on overall basis. Right. I'm sorry. I overall, if I look at two x on 1875, right, that leaves me with a gap of about 690 crores. So 690 crores is essentially vendor care plus UTM plus any new acquisition.

38:21 Is that the broad framework that we should keep in mind? You know, I think the Poly Medic stand alone business will grow faster than the subsidiaries, you know, directionally because, the European assets are growing at a certain pace. POLYMED has been growing much higher pace. So I think in the same kind of growth may not be accurate. On a consolidated basis, we are seeing obviously 2x, but POLYMED stand alone will grow faster than the underlying subsidiaries. Okay. Got it. Got it. And just a clarification on the R and cost. So this quarter, the reason we have the kind of gross margins we do is more due to the inventory that we were carrying plus the price hikes we took? And therefore, should one expect some impact in q two or or that's not really the case? No. No. So I think it is a mix of multiple things, includes price hikes, product mix, and the inventory sort of gains.

39:20 And as Himanshu mentioned early part of the call, we are guiding for more like a 68% to 69% gross margin based on a stand alone basis. So obviously, that would mean that there could be some correction to what we have reported in Q1 as gross margin. Clear. Thank you. But overall EBITDA may remain the same depending because of the higher revenue that you have projected for coming quarters. Very clear, Himanshu. Very clear. Thank you. You. Our next question comes from the line of Bhanga with Energy Analytics. Please go ahead.

40:06 Hi. I wanted to know what is the tariff impact from The US you're estimating for financial year '27? This has been. See, US tariff is in FY '27? Yes. So currently, the the duty is only 10%. So if it remains where it is today, then I think we still have a good pathway, but if any changes happen, then it may impact the business. Alright. Thank you. But US exposure is not very big. This year also, you know, our exposure to The U. Be close between 3.5 to 4,000,000. So it should not be a big issue today if anything happens in The U. S. All right. Thank you.

40:55 Thank you. Our next question comes from the line of Bhavya Gandhi with Bajaj Alternate Investment Management Limited. Please go ahead. Hi. Thanks for the follow-up. Sir, I... If if we were to break up the overall employee expenses and other expenses, how much portion of that would be fixed and how much would be variable as a percentage of sales? We have around 24% as a percentage of sales coming from employee expenses and other expenses also closer to 24%. If you can just help us. Yes. We don't have breakup. So unfortunately, we want to give you an answer right now on this. Okay. Just I wanted to understand how much is the operating leverage, which can still play out on a longer term basis, not just one, two quarter or one or two years. Just wanted to understand on a very long term basis, a three to four year basis, how much could be the operating leverage that can play out?

41:51 Yes. So I mean, you understand, we are a manufacturing company. So we have a lot of blue collar workers who are involved in production. And that's also a very, very reasonable part of our total employee cost, which you see on a consolidated basis. That piece remains as variable. Rest all is fixed, so it's subject to productivity gains. But within the staff also, there is a fixed portion plus a variable portion subject to performance. So there is a mix of things. So it's tough to give a very ballpark number right now on the call. Okay. Sure, sure. We'll take it offline. Thank you. Thank you. Our next question comes from the line of Grijal with KJMC Capital. Please go ahead.

42:41 Yes. Hi. Am I audible? Yes, Grijal. Please go ahead. Thank you for giving me the opportunity. Manjuji, you, in the beginning, outlined Strategy 3.4 Vision 2030, that was very helpful. And as you mentioned, we are planning to double the revenue by 2030 by both organic as well as inorganic means. Given the fact that we are now transitioning or we have already transitioned from being product focused to make therapy focused, if my understanding is correct, are we looking to enter any new therapies or we want to expand within the given therapies which we are already operating in? So, Greeti, I'll answer it straight away. See, currently, we have just started these therapies. You know, it was just started... Maybe some was started last year or some year before that. So these are very, very new. If you remember, historically, our infusion business is a thirty year old business.

43:39 So it takes time to mature any therapy in a lot of regulatory roadblocks, which prohibit you from even moving out of the country because these are mostly critical devices, Class III devices. It takes very much, much longer to register most of these products. Sometimes it takes around two, three years to register product and do clinical trials. So I think we have enough on our plate right now with our existing businesses. And I don't think we'll be ready to launch anything new substantially in next few years. And given the existing therapies which we have present, would it be safe to assume that we cover almost sixty percent, 65% of the consumables used in the hospital? I don't think the market is very loose today.

44:28 If you look at consumable market, there are many other therapies like peripheral vascular, neurology, urology, there are so many other therapies which and all let's say, endosurgery, there are many, many therapies that we don't cover gastroenterology. So there are many deep therapies we are not covering today. So a lot of potential across different verticals. But again, it will take time to build a portfolio of product. But as we move along, think next few years, definitely there is some work happening in the pipe, but I cannot disclose what we are going to do in next two, three years on this call basically. It's impossible. Right. And I think you mentioned sometimes that you are seeing some bounce back in the order business probably because of the inventory normalization.

45:20 Could you comment on that and also give some idea of the working capital cycle? Have we seen any improvement in that? So on the Europe side, we have already seen a growth of around 17% in quarter one compared to the previous year. So I think the demand has come back. Also we have added some new customers. There are some customer acquisitions also. I think Europe seems to be in a pretty safe and good place. So we are back with the growth in European market. But on the working capital cycle, I think cash conversion is still in the same level. In March, it was one hundred forty days. Currently, it's also in similar range of one hundred forty days.

46:09 Okay. And do we expect that to improve going forward? Sorry, can you repeat that again, please? Do we expect that to improve to power the cash conversion cycle? I think it depends, but I would say that currently, we should read it like this. But hopefully, maybe as time progresses and situation global situation normalizes, I think we may see some improvements because of high oil prices also most of the export markets are little choppy because of hard currency are not available in time in many markets where we operate. But now as probably prices stabilize, oil prices stabilize, things will change and improve.

46:55 So hopefully, the cycle should improve. But I don't have a definitive answer today, but hopefully it will improve. Girish, if I could just add to what Himanshu said, given the current geopolitical situation and the war going on, the time for getting the products to the customer also increased, which does tend to put pressure on recovery cycle because you can start getting your cash flow only once the product reached, right? So given that situation, it's tough to give a forward looking guidance on this at this point of Understood. Thank you and all the rest. Thank you. Thank you, Arun Gaurish. Thank you. Next question comes from the line of Pramod Bhatt, an individual investor. Please go ahead.

47:43 Yes. Thanks for the opportunity. I just have one question. From the portfolio, I see that most of the products are the existing products with some other medtech companies. Like we don't produce something new. Do you have anything in plan that you are making something entirely new, which is not currently existing with other medtech providers? See, basically, if you see, POLYMED has three ninety nine patents, and I think we have also disclosed that in the presentation we put out. So POLYMED has a lot of products, which have breakthrough technology. I don't know who we are comparing with. A lot of companies do copy our products. POLYMED is a market leader in infusion therapy and a lot of other therapies we operate on. And there's a reason we are able to make that kind of margin, which other companies don't make.

48:35 So this industry basically works on two different parameters. One is a product performance where we have a global leadership there and then our products are going to 125 countries because this is based on performance, nothing works on price. And second is ability to add innovation, innovative ideas on the existing product. The product may look similar when you look from a catalog perspective, but when you use them or when you when a user sees basically which is a clinician or a doctor, they will see the differentiation in the product. Okay. Thank you. So those patents are worldwide patents, right? Sorry, sir. Can you repeat again, sir?

49:20 The coverage of those patents is not some region basis, right? It is a global patent. So the patents are global patent. Okay. Thank you. Thank you, sir. Thank you. Our next question comes from the line of Girish Jan with KJMC Capital. Please go ahead. Yes. Thank you. I just wanted to ask one question. Manfred, you mentioned about the new facilities you are in operation, I guess, in one in actually was in Moira. That's the one I think is incorrect. Any time line I'm unable to hear very clearly.

50:07 Can you please repeat the question? Maybe you're on speaker phone. I'm not able to understand very clearly. Okay. Can you hear me now? Yeah. Much better, sir. Yeah. I was mentioning that... During the call, you mentioned about two new facilities coming online in the place. One is at and the other one at another place. Could you give us a timeline when are they expected to become operationalized, and which particular therapy if we have decided which therapy they'll be focusing on? Basically, the one coming up in the area would be basically focusing on orthopedics and transfusion business, which we are expanding right now. And then some part of extra capacity expansion of infusion will also go there.

50:58 And talking about Noida, Noida we are already planning to expand our cardio business basically out of the Noida facility. And will they come online in this financial year? Phase one facility should come online by March 27, most probably that's the time line we are looking at, so first quarter of next year. And Zoida facility will come live in quarter first maybe commercially quarter one of FY twenty eight. Okay. Thank you. All the best. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you. And over to you, team.

51:50 I think thank you, everyone, and thank you for all your questions. And I think hopefully, we able to answer them. And let me assure you again to all the investors that the company is on a growth path. We have made systemic changes in the portfolio. Our overdependence, which was there in the vascular segment now is now only 50%. So there's lot of diversification that has happened. And we have moved more from low medium technology to high technology And I think that is where we are shaping up. Also, are adding more electronics in the business where our dialysis machine, our IVM therapy is run on machines. So I think we are diversifying into higher category of business, whereas there are more platforms and products itself.

52:36 So that's the change we are bringing in the portfolio. And that's why we see a growth. And most of the newer products we are developing today are import substitution products. And definitely that will help us to take more market share as insurance penetrates deeper into the hospital sector, ISKCON Bharat penetrates deeper into the hospital sector in India. I think that will change the landscape where hospitals will look at more quality oriented, cost effective devices versus imported devices, which we are using today, which they are more expensive. So these are the changes we see in the industry. And thankfully, this industry continues to grow at a good pace in India, the healthcare industry. And I think as that industry grows, medical devices industry, medical technology industry will as one of the partners or industry will grow in the same pace or even higher. Thank you again for your time and look forward to talk to you soon.

53:34 Thank you so much, sir. Ladies and gentlemen, on behalf of Poly Medicure Limited, that concludes today's conference. Thank you for joining us and you may now disconnect your line.