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00:00Rajiv Juneja, Vice Chairman and MD of Mankind Pharma now joins in.
00:04Hi Rajiv.
00:05Good morning.
00:06Thanks for joining us.
00:07Rajiv, now help us understand this.
00:09You have been in the news for all the right reasons on back of that BSV acquisition that
00:14you announced.
00:15We will talk about the financials of what this acquisition does to you later.
00:20But first up, you had a QIP that was announced to the tune of 7500 crores in the fourth quarter.
00:27The market was of the opinion that this 13,000 crore acquisition would be part funded by
00:31internal accruals and part funded by funds raised to the QIP.
00:36Now of course, we believe you have also increased your credit limit by 10,000 crores.
00:41You want to tell us what is this, what are you going to do with all the funds?
00:45Is the acquisition completely going to be debt funded?
00:48Is it going to be part equity?
00:50We are slightly lost.
00:52Thank you so much for calling me here and let me clarify you right from the beginning,
00:58we have always been averse to having more of debts.
01:03So what basically would happen going forward in the next few days time or in months time
01:09that as a whole out of approximately 14,000 crore rupees deal, 4,000 crore rupees would
01:16be coming from company side, the rest 10,000 is there.
01:20Out of rest 10,000, 3,000 crore rupees would be QIP and the rest would be debt, which will
01:27be approximately the tune of EBITDA to debt ratio would be two times.
01:35That is the actual picture.
01:37So whatever we are taking right now, 10,000 crore rupees permission, it is till the time
01:45we go for QIP, but ultimately QIP would be in the range of 3,000, 7,000 would be debt,
01:554,000 would be coming from company side.
01:58That's the actual position.
02:00Okay, that makes complete sense, Rajeev, now all of this adds up.
02:05So that debt is literally just a bridge to get you from now until the QIP to fill that
02:11gap of 3,000 crores, which will be done through the QIP.
02:15Let me understand this and correct me if I'm wrong.
02:18You're paying about 13,500-14,000 crores to acquire BSV.
02:23Is that going to be all in terms of money spent to get the ball rolling or will there
02:28be more investments between now and say when this turns revenue accretive, for which you
02:34already have a deadline that you could dip into as and when needed?
02:37Yeah, as of right now, this is the only investment would really happen.
02:44I cannot say going forward how much 100, 200 rupees more may be spent for collecting
02:50certain things, but all in all, it's a fantastic NLP entity.
02:56It will add a lot of entry-value products to mankind's kitty.
03:01We were looking for this entity from last couple of years in 2019 as well.
03:05We tried to acquire this, but lost to advent.
03:09So God has different kind of a planning.
03:11So we are having it now much better BSV.
03:16Position right now is that this would be sufficient, no more money, more would be required.
03:22Rajiv, going forward, we have all sorts of numbers when it comes to this particular acquisition
03:29and the kind of contribution it can make to your growth, your top line, as well as your
03:34overall margins.
03:35So can you give us a better idea about what you are estimating and what this acquisition
03:41can do for your consolidated numbers?
03:43If you look at mankind, mankind's growth has always been in the range of 1.3 to 1.4 times
03:51to IPM growth, say approximately in the first quarter, our growth is 12 point some percent.
03:59On the second side, growth-wise, BSV has better growth than us, 15 to 20 percent.
04:06That's a kind of a range.
04:08Their EBITDA is more than us, our EBITDA in the range of 25 to 26 percent, their EBITDA
04:14is in the range of 28 to 30 percent and going forward, this would always increase actually.
04:21So all in all, what we are basically acquiring is a fantastic entity in the form of having
04:28what mankind never had, very high entry-level products, which should not be seen from the
04:35lenses of pharma side.
04:37This is a different kind of entity where products are amazing.
04:42To make these kind of products, you need a time of 5 to 10 years.
04:48At any given time, a number of their products are in almost a monopoly kind of a stage.
04:56If any other competitor would be coming, the price does not go down, profit remains good.
05:02That's a plus side of this business.
05:05You talked about how this debt funding is going to be a little bit of a band-aid for
05:11you through that QIP, right?
05:12But the fact remains, you're still going to raise 6 to 7,000 crores that will be used
05:15to fund the acquisition.
05:17Now what will that do to your finance costs?
05:19Because I'd imagine it would impact finance costs quite significantly and hence impact
05:24profitability at least in the next couple of quarters.
05:27Is that a fair assumption?
05:30So I can tell you that as these credit ratings have been very kind to us, they have given
05:35us a double A plus kind of rating that really talks about the health of mankind.
05:42And I can tell you in numbers, once this stage will come to know, I mean many other things
05:48will happen in the meanwhile.
05:51By the end of October, we'll come to know when bankers, bankers have given us some kind
05:56of a approximate kind of a percentage of interest rate they will be charging.
06:02But we feel that in the next three years' time, hopefully, we'll be able to just pay
06:07back this debt.
06:09In the history of mankind, we have always been averse to debt, never believed in taking
06:14any kind of a debt.
06:15For the first time, we are taking debt.
06:17So we're also equally concerned that from the books of mankind, that should go away.
06:25And for that, there are some non-core business in the books of mankind, Western hotels are
06:31there.
06:32We have put those hotels on the block.
06:35And whatever money would be coming, that would be given to these banks so that earlier, the
06:41better.
06:42That's our payback.
06:43All right.
06:44Well, Rajiv, we'll leave it at that.
06:48Thank you so much for joining us and taking us through the latest in terms of the contours
06:53of your update here.
06:54Of course, we look forward to having another conversation soon once we actually do have
06:59more of a clarity when it comes to your debt numbers eventually down the line.
07:03But thank you so much for joining us and taking us through this update.