Chief Financial Officer / India
Decisions that made the numbers smaller before they made them true
- Revenue, year to March 2026
- ₹4,860 Cr
- 56 per cent US generics, 22 per cent India branded formulations
- Finance colleagues led
- 210
- Finance, tax, treasury, investor relations and reporting across five locations
- Net debt to EBITDA, March 2026
- 0.5x
- Down from 1.9x in March 2023, during a plant remediation
Decisions & consequences
01Choosing the slower remediation after a USFDA warning letter
In November 2021 the USFDA inspected Unit III, one of our two oral-solid plants outside Hyderabad. The Form 483 listed nine observations, several concerning audit trails and data handling in the quality-control laboratory. The site was classified Official Action Indicated, and a warning letter followed in May 2022. Unit III supplied ₹620 crore of our ₹2,000 crore US revenue, and eleven pending ANDAs referenced it. Until the agency was satisfied we could not expect approvals from the site, and a failed reinspection could have led to an import alert.
Two plans reached the executive committee. Our US commercial president proposed a ₹90 crore consultant-led programme, full output maintained, and six pending products moved to Unit II through site-transfer filings. Our head of quality proposed rebuilding the laboratory's systems and staffing, which needed ₹285 crore over two years and about 20 per cent lower output while investigations were cleared. I supported the second plan. The cheaper one assumed the laboratory could clear its backlog while carrying the same load, and nothing in our own release data suggested it could.
The cost was visible. We forwent about ₹310 crore of revenue over eighteen months, booked a ₹46 crore provision for batches on hold, withdrew earnings guidance and recommended cutting the dividend from ₹6 to ₹2 a share for 2022–23. The executive chairman accepted the dividend cut reluctantly. I moved four products to Unit II, where validated capacity existed after our US portfolio exits, rather than six.
Unit III was reinspected in March 2024 and classified Voluntary Action Indicated, and the agency closed out the warning letter in February 2025. Seven of the eleven pending ANDAs were approved by March 2026. Our monthly management report now carries laboratory release capacity beside production capacity for every site, and plant heads defend both numbers in the budget.
I would change two things. I would show investors the full cost on the first call instead of in three instalments, which spent credibility we later had to rebuild. And I would put laboratory measures into plant budgets before an inspector obliges us to.
Taking ₹88 crore out of the channel to see the real business
When I reviewed our domestic business in mid-2022, reported revenue had grown steadily, but stockists were holding 46 days of our inventory against the 25 to 30 days their own sales justified. Each quarter ended with schemes offering extra free goods for larger orders. The consequences arrived later: expired stock returned to us cost ₹38 crore a year, receivable days from stockists had stretched to 52, and field-force incentives paid on primary sales rewarded the push rather than the prescription.
I proposed ending quarter-end schemes, capping stockist inventory at 30 days and moving incentives for our 2,150 representatives to secondary sales measured through stockist data. The president of our India business disagreed strongly. He argued that competitors would fill the shelves with their own schemes, that smaller stockists in district towns depended on our credit, and that a weak quarter would demoralise the field force. He was right on all three counts. We went ahead because the alternative was reporting growth the market was not producing.
The correction cut primary sales by ₹88 crore in the July to September 2022 quarter. Domestic revenue grew only 1 per cent in 2022–23 while the market grew faster, and I explained the gap to analysts and to the Audit Committee as a deliberate choice rather than a lost quarter. About 140 smaller stockists, mostly in district towns, stopped dealing with us, and some prescribers there moved to rival brands.
By March 2023 stockist inventory was at 29 days. Expiry returns fell to ₹14 crore by 2025–26 and stockist receivable days to 34, while secondary sales grew at about 11 per cent a year between 2023–24 and 2025–26. Domestic revenue reached ₹1,070 crore. The board now sees secondary sales and channel days in every quarterly pack, next to the revenue we report.
I would do one thing differently. We changed the incentive before our stockist data was reliable, and for two quarters the field force was paid on figures they did not trust. I would invest in the data first, then change what people are paid on.
Exiting 23 US products that were consuming the plant
By 2022 Meruvel sold 186 generic products in the United States. The catalogue had grown through years of filings, and the commercial team valued breadth because large buyers prefer suppliers who can fill many lines. When we allocated plant time, freight, sales deductions and failure-to-supply penalties to each product, 38 of them earned negative contribution. Several faced seven or more competitors at prices that had fallen by more than half since launch. At the same time, the Unit III remediation meant we needed space at Unit II for products we wanted to move.
I recommended exiting all 38. Our US commercial president argued that dropping products would weaken our standing with the wholesalers and buying groups whose contracts also covered our profitable lines, and that some losses were the price of the relationship. We compromised. We kept 15 products where a customer's wider contract depended on them, and exited 23 over twelve months, giving each customer the notice its contract required so that we incurred no failure-to-supply claims.
We gave up ₹164 crore of annual revenue. One wholesaler responded by moving two profitable products to another supplier, costing us ₹28 crore a year; I had judged that reaction less likely than it proved. The freed capacity, about 900 million tablets a year at Unit II, absorbed four products transferred from Unit III and made the remediation workable without abandoning those customers.
US gross margin rose from 47 per cent in 2021–22 to 55 per cent in 2025–26, partly because of the exits and partly because of later approvals. Write-offs of short-dated US inventory fell from ₹41 crore to ₹12 crore a year. Every US product now has a contribution statement that the commercial team and finance review together twice a year, and an exit is discussed as an ordinary portfolio decision rather than an admission of failure.
I would have exited in two waves, starting with products that no major customer bought as part of a bundle, and I would have spoken to the largest wholesaler myself before its buyers heard about the exits from our sales team.
Phasing a ₹545 crore backward-integration plan against the promoter's preference
Six of our highest-volume molecules depended on key starting materials sourced mainly from China. Supply interruptions after 2020 showed how exposed we were, and in 2023 our executive chairman, a member of the promoter family, proposed a ₹545 crore intermediates block at our Visakhapatnam API unit to make all six in-house. His case was strategic and sincere: control the chemistry and the company controls its fate.
My analysis was less comfortable. The full block would earn below our 16 per cent return hurdle for at least four years, would add about ₹300 crore of debt in the same years we were funding remediation, and would fix process routes for three molecules whose US prices were still falling. I proposed a ₹215 crore first phase for the three molecules with the most concentrated single-source exposure, and qualification of a second, Indian supplier for the other three. Qualification takes time, because a new starting-material source must be validated by us and, for US products, reported through the appropriate regulatory filings.
The board discussion was the most difficult of my tenure. The chairman saw phasing as timidity, and two independent directors supported him. The Audit Committee chair asked for an explicit return hurdle and a post-investment review. The board approved phase one with both conditions.
Phase one was commissioned in March 2025 and cut input costs for its three molecules by 14 per cent, about ₹38 crore in 2025–26. The trade-off showed itself as well. Second-source qualification took fourteen months, longer than I had planned, and in mid-2025 one of the unprotected molecules was short of material for nine weeks, costing ₹22 crore of sales. The chairman was entitled to point that out, and he did. Phase two, now estimated at ₹330 crore, returns to the board with the 2027–28 budget.
I would start supplier qualification on the day a board approves a phased plan, not after the first phase has been designed. I would also give the chairman's strategic argument a fuller hearing in my paper. It deserved to be priced, not merely answered.