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00:00We're speaking now with Himanshu Baird. He's the MD of Polymedicure. The company has raised a thousand
00:05crore rupees through a QIP and approved an allotment of 53.19 lakh equity shares. It was
00:13at a price of 1880, so a discount to Thursday's closing price at least. Mr. Baird, a very good
00:19morning to you and great to speak with you here on NDTV Profit. Let's start with the basics.
00:24What is the purpose of this fundraise, the thousand crores you've raised? Can you lay out
00:29for us the plans going forward? See, basically we are setting up three new plans and basically
00:35this is for expansion of our dialysis, renal business, cardiology business and critical care
00:40business. And most of the products we are going to make are going to be import substitution products.
00:46So that's where the investment is coming in. And then part of the money would be kept for
00:52some acquisition of partialities, which we will look in the next maybe six to eight months
00:57and also for general corporate purposes. You know, we were speaking this morning and of
01:03course you're in the business of manufacture and export of medical devices. Mr. Baird,
01:09we were speaking this morning on the show about MPOX and the first case in Thailand. I mean,
01:16we don't know where it's going to go, but there have already been statements globally, at least
01:20from vaccine makers saying they're ready if they need to be, etc. Just trying to understand your
01:25perspective on this. Clearly the demand for things like disposable syringes is going to go up.
01:32See, we are not in disposable syringes. We mostly do refill syringes and some other products.
01:39But I think this is a pandemic we have to watch out for. And I think what I heard recently from
01:46you know, some vaccine companies, they were still in the development phase of the vaccine.
01:51So I think we have to be careful. I think Indian government has to budge out at the borders,
01:57you know, and maybe screen people at the borders, maybe if there is screening mechanism to do that.
02:02But I can't talk much about it because it's not our area of interest right now.
02:08All right. That's all right. Just wanted to get your perspective because you know,
02:12you're in this space and that is on top of mind. Let's come back to what you do.
02:17Let's talk about what the pricing mechanism is in your sector. Now, you already told us,
02:22you've raised 1000 crores, you want to start three new plants, you're focusing on
02:26three specific segments. What is the kind of pricing mechanism you're expecting? How frequently
02:32do you take or can you take price hikes? See, basically, we are looking at import substitution
02:38right now. And when we look at import substitution, definitely will be cheaper
02:43if you make these products in India. And also, when you look at pricing, you know,
02:49we probably are around 30-40% cheaper than what is being imported into the country today.
02:53So for us, that gives us enough room to go for, you know, further price hikes as we see
02:59raw material prices changing. But I think even at that 30-40% discount, we'll be able to hit our
03:05margins what we have been projecting for in the beginning of the year.
03:09Mr. Baird, good morning. It's also Samina joining in. Congratulations,
03:12your QIP has been subscribed by some very marquee names, Lighthouse, SPI,
03:17Nomura. I mean, you've got the creme de la creme, who's betting big on Polymedica. So
03:22congratulations. And I'm guessing lots of strategic advice as well will come from them.
03:27But you had indicated that you want to make these investments for expansion.
03:31Now, the expansion plan till they become revenue accretive across dialysis, cardiac care,
03:38and critical care. What is the time horizon and what could be the key growth drivers between now
03:45and say the next two to three years until the time that these facilities come to stream?
03:50See, basically, if you remember, we had also did a fundraiser in 2021. And now and out of that,
03:56we have invested in four new plants, and almost 600 to 700 crores were invested there. So all the
04:03plants have gone live. And as we speak, they're getting populated with more equipment, more
04:07machines. And that will help us to initially, that momentum we are carrying with 20% to 22%
04:14growth, that will carry through these two, three, four plants. These new plants have come up in last,
04:20you know, let's say a few years. And once these three additional plants will be ready by end of
04:262026, early 27, I think we'll be able to then, you know, catch up with that momentum again,
04:31and continue with that pace. So that's the whole idea that, you know,
04:36this industry has a long gestation period, because this needs a lot of technology,
04:39and also a lot of regulatory approvals. So we are trying to, you know, match up with the pace,
04:45ensuring that we have enough capacity available to grow. And because Polymer is exporting 70%
04:50of its products. So we know we are also focusing on global markets, where we can sell the products,
04:56you know, which we're going to make in India for the global markets.
04:59You've received approval, I believe, for four products in the US FDA and other 8 to 10 products
05:03are awaiting approval. The four that you've received approval on, how much will they contribute
05:07to your top line? And the 8 to 10 that you're waiting on, when can we expect some news on that
05:12front too? And when will it be revenue accretive largely?
05:16So basically, the sales to the US has started already. And we've just started in this current
05:21quarter. And of course, we had some other products which we were already selling earlier.
05:25But the new products which we have received FDA approvals, we've started revenue for that.
05:30And how much do they currently contribute? And where do you see it at the end of the year?
05:35And the next two to three years?
05:37We have not given that close guidance, but we have given a guidance for three to four years.
05:41And we are expecting a revenue around 15 to 20 million dollars from the US market
05:45in next three to four years. And I think that's already started picking up.
05:49This year, I can't give you a very definite number, but
05:52should be in exceeding maybe two and a half, three million dollars.
05:55On at a more macro level, where do you see volume growth? Because I know domestic,
06:00while may not be the big focus for you, it's a market you cannot ignore. And we've seen that
06:05with a lot of pharma players as well recently with the domestic businesses showing signs of
06:08revival and, of course, opportunity. Where do you or what would you like to see a domestic
06:14business grow at? Because that is in single digits from what I've seen in the first quarter of 525.
06:18And where do you see volumes? What is the percentage growth we can expect from the company
06:23over the next two to three quarters?
06:25So I think for the current year, we expect the domestic business to grow between 20 to 22%.
06:31And the first quarter, the business was slightly lower because of certain government businesses
06:37we had in the previous year of the first quarter, which are not there anymore.
06:40And because of that, we saw a little dip. But on the trade side, which is the majority of
06:45our business, it has grown very well, grown around 25%, even in the first quarter.
06:50And hopefully, we'll continue. And I think we see that great momentum going on.
06:55Already healthcare in India is expanding. And we are getting into all large hospitals today.
07:01So we should be able to reach around 20, 22% for the whole year.
07:05So Mr. Bait, am I understanding correctly that on the domestic side,
07:09you want to move away from government business?
07:14Yes.
07:14And move completely to trade?
07:17Yes, that's correct.
07:18What is the thought behind that? Because the government is a big buyer as well.
07:23There's a lot of schemes and programs. Just want to understand the thought process.
07:28We will be there in government contracts. But basically, we want to focus more on the trade.
07:34Today, 75% of healthcare is now in the private sector.
07:38And government is now becoming more like a payer than, let's say, providing healthcare.
07:43You have Ayushman Bharat. So government's focus is moving more towards the payer side.
07:49And the care is given by the private sector today.
07:52So I think government will be focusing more on the paying side than being a care provider.
07:59So for us, the momentum will shift to the private side.
08:03I think today, the private sector is going much faster than the government sector.
08:08And that's the reason that we are focusing there.
08:10What capacity are you at currently, sir?
08:13Because if you're adding so much more and so much more is coming on stream from 2021,
08:17I'm just trying to understand the demand supply mismatch, if there is any.
08:21That will give us a sense of your pricing power too.
08:24See, currently, we are operating around 75% plus capacity of all our plants.
08:30Technically, we can go up to 80% max.
08:32That is what we know because we also have changed over time in manufacturing processes.
08:38So that's where we are.
08:39But today, I think we almost run at full capacity, what we are doing right now.
08:45And as Polymer is exporting to 120 countries, I think demand outside India is also growing
08:50very, very fast because we are seeing that China plus one, which is playing out very strongly now.
08:56And no new investments are going to China in the last few years.
09:00So I think Polymer and India is very well poised to attract new investments,
09:05new customers in the medtech sector.
09:07China is 150 billion today.
09:09We are just 15 billion.
09:10So there's a big opportunity standing in front of us as an industry to go to global markets.
09:16And that import, I mean, the China import is what impacted you last quarter.
09:21But luckily, that list...
09:22No, no, no, no, no, no, no.
09:23Because see, the good news is that industry is fully regulated today.
09:27And I think that happened only on 1st October 2023.
09:31So I think after that, I think government has gone very strict with regulatory,
09:36bringing the regulation, bringing the standards and medical devices, which never existed before.
09:41And also, with strong support, internal support from the CDSEO,
09:48where they are trying to now control products through testing, even at the customer end.
09:55I think that is going to be a big change in the quality of medical devices sold.
10:00Right.
10:00Himanshu, very lastly, before we have to let you go, a quick word on any upside on margins.
10:06I know you've guided for quite healthy expansion of 100, 150 basis points.
10:11Any upside on margins for FI25?
10:13And will they progressively improve going into the next two to three years?
10:16Because like you said, the regulation in India should also definitely aid players like yourself.
10:23And any big bank FDI approvals that we could be looking forward to from you?
10:28See, basically, we have already guided very well for the margin.
10:32I think the company is doing very healthy.
10:33Last year, we had 26%.
10:35Now we are talking about between 27%, 27.5% EBITDA margin this year.
10:39And I think as we go more in critical care, I think we will see some improvements.
10:44But I can't tell you much about it right now.
10:46But I think as time progresses, our target is in the next two, three years,
10:50we want to reach by around 30% EBITDA margins.
10:53That's what we want to reach.
10:54Good luck.
10:54Congratulations again.
10:55I'm guessing you're going to this weekend laughing with all your new stakeholders at Polymedicure.