MANKIND — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

DIRECTOR · MR. SHEETAL ARORA – CHIEF EXECUTIVE OFFICER &

MR. SHEETAL ARORA – CHIEF EXECUTIVE OFFICER &

WHOLE-TIME DIRECTOR · MR. ARJUN JUNEJA – CHIEF OPERATING OFFICER

MR. ARJUN JUNEJA – CHIEF OPERATING OFFICER DR. SANJAY KOUL – CHIEF MARKETING OFFICER MR. ASHUTOSH DHAWAN – CHIEF FINANCIAL

OFFICER · MR. PRAKASH AGARWAL – PRESIDENT (STRATEGY)

MR. PRAKASH AGARWAL – PRESIDENT (STRATEGY) MR. ABHISHEK AGARWAL – HEAD (INVESTOR RELATIONS)

Moderator · Conference Operator

MR. ALANKAR GARUDE – KOTAK INSTITUTIONAL

EQUITIES · Management

Mankind Pharma Limited November 1, 2023

Moderator · Conference Operator

We will now begin the question & answer session.

Ladies and gentlemen, we will wait for a moment while the question queue assembles.

We will take the first question from the line of Kunal Dhamesha from Macquarie.

Please go ahead.

Kunal Dhamesha

First one on the other expenses which have increased meaningfully on a QoQ and year-on-year basis.

And you also alluded that there were some advertisement campaign expenses.

But how should we look at for future quarters?

Are this level of expenses going to sustain or the campaigns are going to be seasonal and should come down?

Moderator · Conference Operator

We will take the next question from the line of Neha Manpuria from Bank of America.

Please go ahead.

Neha Manpuria

My first question is on the OTC business.

Sheetalji, I think you mentioned that there is obviously optimization of inventory and certain IT tools that we have implemented.

Is that all done?

Should we start assuming the growth improved from the next quarter onwards?

Also in the OTC, is there some seasonality?

Because, if I look at your numbers last year, it seems like the first half seems to do much better than the second half or is that not the case?

Moderator · Conference Operator

The next question is from the line of Chintan Sheth from Girik Capital.

Please go ahead.

Chintan Sheth

A couple of questions.

If you can, talk about the discontinuation of a few products.

What is the impact on our sales during the quarter?

And to add to it, what are our plans in terms of new product launches going forward?

You mentioned one of the products in the OTC you are planning from the Panacea basket.

If you can talk about that in terms of what is the pipeline, we are expected to see over the next 12 months or so?

Moderator · Conference Operator

We will move on to the next question which is from the line of Rashmi Shetty from Dolat Capital.

Please go ahead.

Rashmi Shetty

First question is related to other expenses.

What I want to understand is that all your new expenses which are coming from the Udaipur plant have already been expended in Q2 or it is going to be increased from Q3-Q4 onwards?

Moderator · Conference Operator

The next question is from the line of Dheeresh Pathak from White Oak Capital.

Please go ahead.

Dheeresh K. Pathak

Sir, I am referring to slide #14 and slide #15 of the deck.

If I look at slide #15, what you are showing is that in acute for Q2, market grew at 7 and we grew at 4.9 due to underperformance in gastro and VMN.

I don’t know if you have already explained it, but please explain that why in acute it is lower than the market, and even in chronic, slide #14, you are showing only 1.1x growth of the chronic outperformance versus if you see, we have had much higher multiplier growth versus the market chronic growth rate.

Why this quarter both on the chronic side, the outperformance is lower and on the acute side in gastro and VMN and in overall, why have we done lower than the market?

Moderator · Conference Operator

The next question is from the line of Rahul Jeewani from IIFL Securities Limited.

Please go ahead.

Rahul Jeewani

Sir, can you please explain this quarter-on-quarter improvement which we have seen in gross margins?

And particularly given the fact that our chronic revenue share declined during the Mankind Pharma Limited November 1, 2023 quarter sequentially – 1Q of chronic revenue share was 36% which came down to 34% – but despite that, we have seen expansion in gross margins on a sequential basis.

Are price increases largely a contributor to that quarter-on-quarter gross margin improvement?

Moderator · Conference Operator

We will take the next question from the line of Kunal Dhamesha from Macquarie.

Please go ahead.

Kunal Dhamesha

On the M&A front, let’s say if we do some deal, what would be our comfort in terms of leverage?

While we have strong cash flow, but are we kind of looking for bigger targets or would it be more tuck-in, then what would be our comfort level with deleverage?

Moderator · Conference Operator

We will take the next question from the line of Madhu Prashant, an individual investor.

Please go ahead.

Madhu Prashant

My question is the acquisition you are taking, is it on debt or is it fully cash?

Moderator · Conference Operator

Ladies and gentlemen, due to time constraints, that was the last question.

On behalf of Kotak Institutional Equities, that concludes this conference.

We thank you for joining us.

And you may now disconnect your lines.

Thank you, members of the management.