Hikal conducted conference call on 06 August 2021 to discuss the financial results and performance of the company for the quarter ended June21. Mr. Sameer Hiremath- Joint Managing Director and the CEO, Mr. Anish Swadi - President, Business Development & Strategy, Mr. Kuldeep Jain – Chief Finance Officer of the company addressed the Concall.

Highlights of the Concall

• Revenue recorded an increase of 29% YoY in Q1FY22 led by higher sales of existing products and addition of new products and strong performance in own generics as well as CDMO segment.

• Ebitda margins saw an improvement of 600 basis points to 21% as compared to 14.4% in Q1FY21 led by higher volume, favorable product mix, business activity initiatives and higher operating leverage.

• The company business activity initiatives, have enhanced the overall performance by increasing throughput and reducing costs of existing products. It has helped to improve efficiency and meet increase market demand

• The company's cost of financing has reduced due to lower rate of interest, which augurs well for the company. And it expects the benefits to continue accruing.

• Pharmaceuticals business has performed well registering a YoY growth of 28% for the quarter based on increased volumes of existing API Generics and CDMO products. The company has a healthy pipeline of new products, supported by its new capacities which would come on stream as a result of the capex incurred over last 12-24 months.

• The company has received local approvals to start producing API's at its Panoli site in Q2FY22 and it will also be undergoing US FDA approvals and certification at this site shortly. Additional production block will be commissioned at Unit-1, Jigani, Bangalore in Q2 FY22

• The company has started supplies of Favipiravir's in Q1 FY22

• The Crop Protection business registered a robust YoY growth of 31% in Q1 on the back of strong volume growth of its existing products and further scaled up volumes of a new product. The company expect this positive momentum to continue in the next few quarters based on a healthy pipeline of projects at various stages

• The company has successfully ramped up the production and increased volumes of the new fungicide for Japanese customer in CDMO (contract development and manufacturing company) business

• The company is seeing several new opportunities and new inquiries from new and existing CDMO customers in Q1FY22

• Operations of the company were slightly impacted by the second wave of the COVID-19 pandemic in delayed delivery of raw materials and manpower availability. The company was directly affected by government restrictions on oxygen supply. It had to shut down one of its dedicated plants at Taloja. It used this opportunity to perform regular maintenance activities in order to mitigate the loss of production.

• The company has opted for the new tax regime which will be approximately 26% as compared to 35% in last financial year, which has resulted in a higher net profit. This when considered with the reduced finance costs as a result of successful renegotiation of lower interest rates, have strengthened the financial parameters of the Company

• Towards the end of July, the Raigarh region experienced unprecedented and very heavy rainfall. Due to the Mahad site located in this region bore the brunt of severe flooding. The company immediately took a shutdown on the safe side to ensure safety of its employees. It has mobilized all the necessary resources required from various sites to assist in the cleanup, restoration and restart operations at the site.

• Post pandemic, the company's capex program is back on stream. The company has commisioned additional capacity of development and launch plant in Bangalore. This is primarily for new development pipeline in CDMO business. The company expects to complete several ongoing projects in enxt few quarters of this year.

• The company is working across its supply chain to minimize disruption caused through the pandemic. It has initiated effort to backward integrate the key starting materials of the primary activities ingredients and are collaborating with locals to reduce its dependency on China. The company is taking proactive steps to develop both local and other non China region based suppliers.

• The company is experiencing cost escalation in raw material prices due to shortages. In addition, freight rates have substantially increased over the past few months due to the pandemic situation

• The company maintained its expected revenue growth at a CAGR of high teens and 100 bps improvements in Ebitda margins per year over the next two to three years