Syngene International Ltd Q2 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nitin Gosar - Invesco Asset Management (India) Private Limited - Analyst : Chini, you mentioned about the hedging and...

Question: Nitin Gosar - Invesco Asset Management (India) Private Limited - Analyst : Is it better now?

Question: Nitin Gosar - Invesco Asset Management (India) Private Limited - Analyst : Yes. There was some comment on the hedging part, currency hedging, and if I get you right, then till FY '19 and you are adequately hedged and you may not see the INR depreciation benefit which currently is happening. In that case, would FY '20 when the contract gets renewed or repriced, do you see some kind of readjustment, and then finally, the annual depreciation will start flowing down to your bottom line? How should we look at it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2018 / 9:30AM, SYNN.NS - Q2 2019 Syngene International Ltd Earnings Call

Question: Nitin Gosar - Invesco Asset Management (India) Private Limited - Analyst : Okay. Sorry, just harping on it further, so the INR 69, INR 70, where we hedged ourselves and current rate being INR 73, so after 12 months, which is probably around maybe around April or may be around June, next year, that's when you'll start seeing the actual real rate or the refreshed freshly hedged rate getting reflected into your numbers? M. Chinappa Yes.

Question: Charulata Gaidhani - Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Analyst : My question pertains to the increase in material costs. There is 38% increase. Whether you expect this to continue at this rate? Or is it a temporary phenomenon? M. Chinappa Charulata, again, as I mentioned in my commentary, look at our gross margin as a net of employee cost, material cost and power cost. So if you look at that, we are at 46%. Our gross margins are at 46%, and that's in line with Q1, in line with last year's full year average. And when you look at Q2 of last year, there was something that we had to -- that digital export incentive that played out, and that gave us the higher revenue and a higher margins last year. But if you really look at our full year average, 46% is our current run rate. So sometimes when deposits involve a higher rate, the development work that we do tends to have a higher material cost. In Discovery Services, we do have a higher employee cost, but blended combined cost is about 54%.

Question: Charulata Gaidhani - Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Analyst : Right. Right. Okay. But do you think it would pan out in a year or 2?