Nitesh Dutt: Sir. Thanks for your opportunity. I have a question on our manufacturing strategy for the India business. So I just want to understand, number one, what percentage of your manufacturing in India is being done in-house versus outsourced? And are you expecting to maintain a similar mix going forward? And second, for the outsourcing part, how many suppliers do we typically have. Is it like a fragmented supplier base or consolidated amongst a few companies?
Erez Israeli: Yes. So when you say supply you mean global or for India?
Nitesh Dutt: For India.
Erez Israeli: So right now, about 60% of what we do is [indiscernible] give or take. And likely that these numbers will increase in the future because we did – we do have localizations of some of these products in the future. As for numbers of partners, I don’t recall the exact number, but I’m assuming that it’s double digits likely. But I don’t have the exact number on top of my head.
Nitesh Dutt: All right. And sir, a follow-up on that. The government has been placing a lot of emphasis on stricter implementation of schedules and norms and quality standard side? So how can it impact our procurement strategy on the outsourcing front? So can it lead to some sort of consolidation of supplier base or maybe an increase in the procurement cost, et cetera? Because if the quality cost increase for our suppliers then cost – our COGS might increase as well.
Erez Israeli: So I can tell you that [indiscernible], we have one standard of quality. We believe that all people deserve the same quality, no matter what is their nationality and that’s the policy of Dr. Reddy’s. We encourage everybody to do the same. So for us, any guidance in that direction, we see that as an opportunity. And if there are people that need to upgrade their system, it’s good, it’s good for India.
Nitesh Dutt: All right. Thanks. I will get back in the queue.
Operator: Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Tushar Manudhane: Audible now.
Operator: Yes. Please go ahead, sir.
Tushar Manudhane: [Indiscernible]
Operator: Sorry to interrupt. But the line is bad again for you. May I request you to please move the area with better network?
Tushar Manudhane: Is this better?
Erez Israeli: Yes.
Tushar Manudhane: Okay. Sir, on rituximab to understand the [indiscernible] be concerned?
Erez Israeli: So rituxumab, we launched in the – yes, so rituximab, we are planning to launch in the U.K. As we speak, we did not do it yet. So we are – we believe that we should get the approval soon. We are after the qualifications in the U.K. and we are waiting for the inspection of the EMA as well.
Tushar Manudhane: Understood. Sir, secondly, on the inventory, I see quarter-on-quarter reasonable increase. If you could explain that?
Erez Israeli: Again, sorry? Again, can you repeat?
Tushar Manudhane: There has been a reasonable increase in the inventory on a quarter-on-quarter basis.
Erez Israeli: You’re talking about the whole inventory?
Tushar Manudhane: Inventory?
Parag Agarwal: Yes, it yes, let me take that question. The increase in inventory is primarily because of some of the geopolitical risks, which are there, which are having some impact on the roots of supply. So we proactively build inventory to make sure that there’s no loss of sales. That’s the primary reason for the increase.
Tushar Manudhane: Understood. And lastly, sir, with SG&A expense also, we’ve seen increase over the past three to four quarters. So is this a run rate to consider for FY2025? Or will there be further increase in this?
Parag Agarwal: The overall, if you look at the SG&A expenses this year for the full-year as a percentage to sales, it’s about 27.7%, which is same as last year. Now quarter-on-quarter, you will find fluctuations happening. Broadly, we are investing behind our brands and sales and marketing, behind our capabilities, while also driving productivity. Broadly, I would say that SG&A over the next 12 months or so as a percentage to sales would remain in the similar range.
Tushar Manudhane: Got it. Thanks. Thanks for the opportunity.
Operator: Thank you. The next question is from the line of Ankush Mahajan from Axis Securities. Please go ahead.
Ankush Mahajan: Thanks for the opportunity. Sir if we see that we have a U.S. sales of $390 million. On a sequential basis, it has decreased. Just trying to understand, sir, this decrease in the base business or in the gRevlimid business?
Erez Israeli: The decline is a combination of the sequential decline is part of it is normal pattern of ordering of the product. So and part of it is some price erosion that we got on a few products. It’s a combination of both.
Ankush Mahajan: Sir, what is the guidance of margins – full year guidance of EBITDA margins for FY2025?
Erez Israeli: So as you know, we are not giving guidance. In general, we are repeating that the normal long-term place that we want to be. So the 25% EBITDA with 25% ROCE, double-digit growth, it’s something that we are consistently saying that this is the range that we want to be. Sometimes we’ll be above it, sometimes will be below that, but we feel very comfortable that this is a place in which we can both invest for the future, and it allows us a significant room for improvement – for investment in the future as well as bring very, very healthy return to the shareholders. This year, we are, by and large, higher than that. And – but there will be timing that it will be – it can be even lower than that. But this is the where we feel comfortable to be. So we are not giving a kind of overall guidance, but we’re not giving guidance for a specific quarter or specific.
