Cupid Limited (CUPID) Q4 2021 Earnings Call Transcript

Cupid Limited (NSE:CUPID) Q4 2021 earnings call dated Jun. 04, 2021

Corporate Participants:

Binay Sarda — Christensen Investor Relations

Om Prakash Garg — Chairman and Managing Director

Veena Garg — Non-Executive Director

Analysts:

Vaibhav Badjatya — HNI Investment — Analyst

Dhwanit Savla — Individual Investor — Analyst

Omkar Gangurde — Sri Consultancy — Analyst

Karan Mohindru — Mohindru Family Office — Analyst

Prerit Bansal — Individual Investor — Analyst

Abhi Jain — JK Business Services — Analyst

Subbu Murugesan — Individual Investor — Analyst

Aakash Matalia — Individual Investor — Analyst

Yogansh Jeswani — Mittal Analytics — Analyst

Nikhil Chaudhary — Crystal Portfolio — Analyst

Mukesh Kumar — Individual Investor — Analyst

Dinesh — Individual Investor — Analyst

Santosh Jain — Individual Investor — Analyst

Raghav Hans — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Cupid Limited Q4 FY ’21 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. Binay Sarda from Christensen IR. Thank you. Over to you, sir.

Binay Sarda — Christensen Investor Relations

Thanks, Faizan. Good evening to all of you, and thanks for joining this Q4 FY ’21 earnings call for Cupid Limited. We have mailed the press release to you. I hope you have received the same, and we have also uploaded this on our website and the stock exchanges. To discuss the results and address the queries of the investor, we have with us Mr. Om Garg, Chairman and Managing Director of the company. Mr. Garg will give a brief overview of the quarter gone past and then we’ll open the floor over to Q&A session.

I would like to remind you that everything said on this call that reflects any outlook for the future which can be construed as a forward-looking statement must be viewed in conjunction with the uncertainties and the risks that we face. These uncertainties and risks are included, but not limited to, what we have mentioned in the prospectus filed with SEBI and subsequent annual report, which you can find on the website.

With that said, let me hand over the call over to Mr. Garg. Over to you, sir.

Om Prakash Garg — Chairman and Managing Director

Thank you, Binay. Good afternoon, ladies and gentlemen. On behalf of Cupid Limited, I would like to welcome you all at the fourth quarter FY ’21 and the full year ’21 earnings conference call today. By now I assume that you had a chance to look at the results we had published last night after the board meeting. So I would not waste time to repeat all those numbers, and we’ll straight away go to the Q&A session.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] First question is from the line of Vaibhav Badjatya from HNI Investments. Please go ahead.

Vaibhav Badjatya — HNI Investment — Analyst

Yeah. Hi, sir. Thanks for providing the opportunity. Just wanted to understand that one of your competitor, Veru, has actually announced that they want to exit the business, which is one of their non-core business now because they are moving towards more R&D-based company. So just wanted to know have you — are you interested in kind of acquiring that business of your competitor and then growing by the way of consolidation?

Om Prakash Garg — Chairman and Managing Director

We have seen their publication where they have announced their intention to look for investors or even for a complete exit. We have had no formal plan. However, we believe that this sale, when it is completed, would open up more opportunities for Cupid in future.

Vaibhav Badjatya — HNI Investment — Analyst

So just — I mean, wouldn’t we better of acquiring the company rather than someone else acquiring this because then there are just two of us in the marketplace, right? If we were to acquire it, it is practically a monopoly business for us.

Om Prakash Garg — Chairman and Managing Director

First of all, it depends on what is their expectation. What is their asking price. And for Cupid, it may be more profitable to go for new businesses, just like the medical devices business as compared to putting more investment and hard work into the female condom alone.

Vaibhav Badjatya — HNI Investment — Analyst

Okay. Okay, I got it. Thank you.

Operator

Thank you. The next question is from the line of Dhwanit Savla, Individual Investor. Please go ahead.

Dhwanit Savla — Individual Investor — Analyst

Hi, sir. I have couple of questions. Firstly, I would want to know, from a product mix, I can see that we have made [Indecipherable] and broadly distribute into three major categories of the product mix; IVDs, condoms. Can you tell me what is an approximate margin we are getting on each of this business? And has we seen any cost pressure, especially in our core raw material that is latex and rubber-based products? And secondly, I just wanted to know what has been the impact of the second wave of COVID on our business? And have we resume normal operations yet? Thank you.

Om Prakash Garg — Chairman and Managing Director

Okay. Let me start with your last question. We are expecting full production in this post-corona period. In that, we are working at the 92% capacity right now in our Nashik plant. With respect to your second question, yes, we have seen an increase in the input cost, about 18% increase in the last quarter for latex and 25% increase in cost in silicone oil. However, I think we have reached the peak in these prices, and it should start to come down to the normal levels in last few years. And about your first question, our margin in male condom is between 15% to 20%. And for female condoms, it’s anywhere from 45% to 55%. And in the lubricants, it’s about 40%.

Dhwanit Savla — Individual Investor — Analyst

Okay. Thank you. Just one little summation or clarification. Can you just roughly tell us that — I have read that our order book stand around INR110 crores to INR115 crores. So for this current year, how does your outlook seems? And will we be able to go back to our pre-COVID or that 2019 kind of a performance level or we will be even better than that, that can be the baseline?

Om Prakash Garg — Chairman and Managing Director

Okay. Our order book as of April 1 stands at INR113 crores. This does not include our projected business from the sale of medical devices, which at a minimum, we are expecting INR40 crores to INR50 crores in this current financial year. And our total performance we are projecting would exceed, slightly exceed the ’19 level. We are looking at top-line of approximately INR170 crores by March 31, ’22.

Dhwanit Savla — Individual Investor — Analyst

That’s great, sir. Thank you for the option. I will join back the queue for any other further questions.

Om Prakash Garg — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Omkar Gangurde from Sri Consultancy. Please go ahead.

Omkar Gangurde — Sri Consultancy — Analyst

Yeah. Hello, sir. I hope everyone, including you and your family and workers are safe. My question is regarding the South African order which you have stated that you expect a significant portion of that order. So what exactly that means, can you please explain that?

Om Prakash Garg — Chairman and Managing Director

Okay, yes. The South African government has floated a new tender which is asking for a total procurement of 1 billion male condoms and 40 million female condoms each year for the next three years. And we have submitted our bids already. And based on our input from the market and from the government officials, last year, many of the manufacturers could not deliver their allocated quantities mostly due to corona problems. So we are expecting an order worth INR60 crores to INR80 crores each year from this tender.

Omkar Gangurde — Sri Consultancy — Analyst

Okay. So INR60 crores to INR80 crores both for female, the total order you are saying?

Om Prakash Garg — Chairman and Managing Director

Yes. Total order — at a minimum between INR60 crores to INR80 crores. And this will be — starting year will be October 1, ’21 to September 30, ’22. This is their first year duration.

Omkar Gangurde — Sri Consultancy — Analyst

Okay. So INR60 crores to INR80 crores order for every year. And what would be the total order size which they would be giving?

Om Prakash Garg — Chairman and Managing Director

Which one?

Omkar Gangurde — Sri Consultancy — Analyst

The total order size, what would be approximate?

Om Prakash Garg — Chairman and Managing Director

No. The total order each year to Cupid, we are expecting what would be minimum INR60 crores to INR80 crores each year for the next three years.

Omkar Gangurde — Sri Consultancy — Analyst

I understood that. That would be for the Cupid Limited. But what would be the total order they would be giving? I mean, the exact — total tender I’m asking, out of which, Cupid would be getting around INR60 crores to INR80 crores.

Om Prakash Garg — Chairman and Managing Director

Yeah. It would be about 10% to 15% of the total.

Veena Garg — Non-Executive Director

Out of the total tender.

Om Prakash Garg — Chairman and Managing Director

Yeah. We don’t know the total amount because that will depend on the price, unit price they would be awarded the contract. But 1 billion male condoms at least INR50 per condom for male and about INR30 rupees per piece for female condoms.

Omkar Gangurde — Sri Consultancy — Analyst

Okay. And the second question is on the IVD sale. You mentioned about all the three verticals, margins, but what would be the margins for that particular vertical, IVD sale?

Om Prakash Garg — Chairman and Managing Director

Okay. We are expecting minimum margin of 15% to 20% on the IVD sales. We are still exploring the market in detail, but the indications are that we should have at least 15% to 20% margin, both from the export orders as well as from the domestic market demand.

Omkar Gangurde — Sri Consultancy — Analyst

And you are targeting around INR50 crores of the total revenue, right?

Om Prakash Garg — Chairman and Managing Director

Yes. INR50 crores this year. And the product which is in maximum [Phonetic] demand right now is the antigen rapid test kit, and this demand will continue until 70% of the citizens get vaccinated, which could happen anywhere between March to June next year.

Omkar Gangurde — Sri Consultancy — Analyst

Okay.

Om Prakash Garg — Chairman and Managing Director

So we expect this demand to continue strongly.

Omkar Gangurde — Sri Consultancy — Analyst

So at least for a year you expect this year to — this to be continued, right?

Om Prakash Garg — Chairman and Managing Director

Yeah. Actually, with time, we are expecting the sales volume of medical kits to even go higher. It could be easily INR100 crores in the next year, next financial year ’23. And besides the antigen COVID rapid test kits, we are also setting up our capabilities to produce test kits for malaria, dengue, HIV and also pregnancy test kits. And the demand for most of these items is improving mostly from exports.

Omkar Gangurde — Sri Consultancy — Analyst

Okay. But the question is that what gives you the confidence and visibility to project a doubling of revenue from INR50 crores to INR100 crores from this particular side of the business?

Om Prakash Garg — Chairman and Managing Director

Right now, based on the indications we are getting in terms of the customers’ inquiries and some of the tenders which are in the planning stages and based on the current market price, we have projected these numbers. These are very preliminary numbers. And as we get into the business this year, we would have a better handle on these projections.

Omkar Gangurde — Sri Consultancy — Analyst

Sir, the last question is, apart from all these businesses, do you plan to venture into any other particular businesses? As you have said that you won’t be putting much money or hard work in the female condom business of the competitor.

Om Prakash Garg — Chairman and Managing Director

Yes. In terms of our production capacity versus the worldwide demand for condoms, we see better margins in other business vertical. And right now, we are looking at these medical devices diagnostics. And we may expand this business to manufacture more products. And we are always looking for new opportunities as our investments and results have exceeded INR65 crores as of March 31. So we are looking for some new opportunities as well. But right now, our emphasis is to increase our production capacity for the medical devices business.

Omkar Gangurde — Sri Consultancy — Analyst

Okay. Just a last quick question. What’s the update on the U.S. FDA front?

Om Prakash Garg — Chairman and Managing Director

U.S. FDA front, the clinical trial in South Africa has been delayed by five months due to their complete shut down due to pandemic. And now we expect to submit our application, a first part of our — next year, January, February.

Omkar Gangurde — Sri Consultancy — Analyst

Can any particular orders from Brazil you are expecting?

Om Prakash Garg — Chairman and Managing Director

Yeah. They are talking about the new tender to be published at the end of this year.

Omkar Gangurde — Sri Consultancy — Analyst

End of this financial year or calendar year?

Om Prakash Garg — Chairman and Managing Director

No, Calendar year. November-December ’21.

Omkar Gangurde — Sri Consultancy — Analyst

Okay, okay. Thank you very much.

Operator

Thank you. The next question is from the line of Karan Mohindru from Mohindru Family Office. Please go ahead.

Karan Mohindru — Mohindru Family Office — Analyst

Hi, everybody. First of all, I would like to congratulate the management for a good set of numbers despite reaching [Indecipherable] level. So my question is regarding…

Operator

Mr. Mohindru, sorry to interrupt you. The audio is not clear from your line, sir.

Karan Mohindru — Mohindru Family Office — Analyst

Okay, okay. Is it better now?

Operator

Yes, sir. Thank you.

Karan Mohindru — Mohindru Family Office — Analyst

Okay. So my question is regarding the demand projections. So what kind of demand growth or like tender growth or like tender float you see in coming year or like upcoming few years? I have seen the South African tender, that’s signed. Other than that, like what else do you expect? Which are tenders you expect will be floated this year or next year?

Om Prakash Garg — Chairman and Managing Director

Okay. We are — as I mentioned to the earlier caller, our projection right now for this financial year FY ’22 is to have the top-line of about INR170 crores. And then an increase of 10% to 15% per year minimum going firework, at least for next couple of years.

Karan Mohindru — Mohindru Family Office — Analyst

Okay, okay. Got it. Got it. So my second question is regarding your focus of increasing the branch footprint in Indian market. So I haven’t seen any aggressive brand awareness campaigns coming up from Cupid. So if you compare it with the competitors in Indian market. So is it like by design or like are we not focusing any domestic market?

Om Prakash Garg — Chairman and Managing Director

No. The Indian market for male condoms is very, very competitive and the margins are lot less than the margins we are getting in the export sales. So right now, our priority is for the export business rather than for domestic sales.

Karan Mohindru — Mohindru Family Office — Analyst

So what about female condoms, because there are not KALs for that, right, in domestic market?

Om Prakash Garg — Chairman and Managing Director

Female condom domestic market is very slow. The awareness about female condoms in India is still very limited. We are selling about 1,000 condoms per month through our Internet sales. And we have engaged with the local marketing company to sell female condoms throughout India. But in general, I would say, there is a limited scope about the increased the sales of female condoms also.

Karan Mohindru — Mohindru Family Office — Analyst

Okay. Got it. And my last question is regarding the acquisition of the diagnostic kit manufacturing company. So are we planning to like remove our focus from condom business to this diagnostic kits manufacturing? Like, how is it? Like, how will be the future predictions going further? Like, how much revenue will be coming from diagnostic kits segment?

Om Prakash Garg — Chairman and Managing Director

First of all, we are not diminishing our emphasis on the condom business. In fact, with the expanded capacity we have from the last year, we have a total production capacity of 560 million condoms each year, both male and female. And we are one of the lowest cost producers of condoms anywhere in the world. We believe that this is a right size of production level because some of the factories producing 3 billion to 4 billion condoms one year, they were working at only half their capacity, because either their cost of production is too high or their order book is low. We are in a very favorable situation, both in terms of our capacity as well as in terms of our competitiveness. And as I mentioned, still we are able to make 15% to 20% margin on the sale of our male condoms. And recently, due to increased input cost, we have been able to negotiate a higher sales price with our major customer in last three months.

Now our emphasis on medical devices business is in [Technical Issue] [37:17] to what we are already doing in the condom business. We see, going forward though, more profit opportunities, more business opportunities in the medical devices field as opposed to straight condoms sale. So that is why we are devoting lot of time and efforts to do research about the total market requirement and forecast for these medical devices worldwide.

Karan Mohindru — Mohindru Family Office — Analyst

Okay. So we are planning to move these devices, like export these devices as well, our diagnostic devices?

Om Prakash Garg — Chairman and Managing Director

Yes. We will continue with the condom business as well as we will try to expand our medical devices business going forward.

Karan Mohindru — Mohindru Family Office — Analyst

So what is your guidance, like the sales guidelines improvement?

Operator

This is the operator. The line for the management has got disconnected. Please hold while we reconnect them. Thank you. [Technical Issue] Ladies and gentlemen, the line for the management has got disconnected. Please hold while very reconnect them. Thank you.

Ladies and gentlemen, thank you for patiently waiting. The line for the management is reconnected. Thank you. And over to you, sir. Mr. Mohindru, please repeat your question.

Karan Mohindru — Mohindru Family Office — Analyst

Sure, sure. Yeah. So what I was asking is like, what is the projected growth for like overall condom plus diagnostic kits business which can comfortably be assumed? This is kind of related growth which you are assuming and what you did in the top-line?

Om Prakash Garg — Chairman and Managing Director

Yeah. We are projecting a minimum revenue of INR40 crores to INR50 crores from our diagnostics business out of total of INR170 crores during the current financial year. And going forward, we hope to increase our top-line through more opportunities in the medical devices field.

Karan Mohindru — Mohindru Family Office — Analyst

Okay, okay. Got it. Got it. Okay. Thank you. This is all from my side. Thank you.

Operator

Thank you. The next question is from the line of Prerit Bansal, Individual Investor. Please go ahead.

Prerit Bansal — Individual Investor — Analyst

Hi. Thank you for the opportunity, sir. I have couple of questions. Firstly, I have a question on female condoms. Can’t we operate at a lower margin in India on female condoms and spend something on development of awareness and the market in condoms in India so that in future we can take some benefit from it? And my second question is relating to other expenses. I see a sharp decline in the other expenses on Y-o-Y and Q-on-Q basis as well. So what contributes to this decline and is this sustainable?

Om Prakash Garg — Chairman and Managing Director

Okay. To answer your first question, we are selling it at a much lower price to this distributor, the female condoms in India. It’s not so much priced as about the familiarity. And the promotion of female condoms, we are trying it through various means, including we have lobbied to the Health Ministry in Delhi, and we are hoping that they would come out with a tender to supply female condoms in India.

And what was your second question, please?

Prerit Bansal — Individual Investor — Analyst

My second question was relating to other expenses. There is a sharp decline in other expenses on Q-o-Q as well as on Y-o-Y basis. So what contributes to this decline? And is this decline sustainable?

Om Prakash Garg — Chairman and Managing Director

No. We see a better order book in this quarter and rest of the year and we are trying to cut our costs wherever possible. And most of all, we are trying to improve our productivity. And our operating efficiency was 92% in the last quarter as well as for this entire year FY ’21.

Prerit Bansal — Individual Investor — Analyst

Correct sir. But what is the reason behind decline in the other expenses? Which expense has been curtailed majorly?

Om Prakash Garg — Chairman and Managing Director

First of all, with all our suppliers, we are negotiating very aggressively. And due to the competition in the market, we are able to make some reduction in cost there. And also, in terms of improving the productivity of the labor and by operating the machinery more efficiently, our overall cost of production has come down.

Prerit Bansal — Individual Investor — Analyst

Thank you, sir. Thanks for the opportunity.

Operator

Thank you. The next question is from the line of Abhi Jain from JK Business Services. Please go ahead.

Abhi Jain — JK Business Services — Analyst

Sir I would like to ask you that the company is currently highly undervalued and you have enough cash on your book, why not utilize that cash to have a share buyback? This will help create shareholder wealth as well as increase the earnings per share. So are you considering a share buyback? And my second question is around succession planning, we will come to it later.

Om Prakash Garg — Chairman and Managing Director

What is your second question?

Abhi Jain — JK Business Services — Analyst

Sir, I’ll come to it later. First question is related to share buyback. Why are you not considering a share buyback given that the company is highly undervalued right now?

Om Prakash Garg — Chairman and Managing Director

Okay. We are considering the buyback option, but at the same time, we are also looking at the other possible requirements and use of funds, which includes the dividend is one item. Second of all, we have about INR7 crores more to spend on the medical devices facilities at Nashik. And also, we would need funds for the working capital for the medical devices business. So we have to look at all of these projected requirements and then come to some kind of conclusion about the buyback.

And what was your second question, sir?

Abhi Jain — JK Business Services — Analyst

So my second question is around succession planning. So have you put in a succession plan in place?

Om Prakash Garg — Chairman and Managing Director

Okay. We, as I mentioned in earlier quarters’ earnings call, we are still looking at a suitable candidate for the CEO job. But in spite of that, our current management team is experienced and doing a reasonably good job. So as soon as we find a CEO, our rest of succession plan is in effect. We have quite capable and experienced people in the second line and third line of management.

Abhi Jain — JK Business Services — Analyst

Sure. Thank you, sir.

Operator

Thank you. The next question is from the line of Subbu Murugesan, Individual Investor. Please go ahead.

Subbu Murugesan — Individual Investor — Analyst

Hello, sir. Can you hear me?

Om Prakash Garg — Chairman and Managing Director

Yes. Yes, sir.

Subbu Murugesan — Individual Investor — Analyst

Okay, yeah. So like just a few questions from my side. You said the order book is about INR113 crores, can you give us a split of how much is male and how much is female in out of this INR113 crores?

Om Prakash Garg — Chairman and Managing Director

Currently, 35% of the orders are for female condoms as we are closer to completing the last tender from Brazil. However, as I mentioned earlier, we are expecting new orders for female condoms both from South Africa and from Brazil.

Subbu Murugesan — Individual Investor — Analyst

Okay. And this INR113 crores, so can you tell me how — what’s the timeline for completion? Is it split equally for the next three quarters or is it like I think 35-35-35 for the next three quarters or is it more in the next quarter and then a smaller in the next couple of quarters? Can you just tell me how this will split across the next three quarters?

Om Prakash Garg — Chairman and Managing Director

I think this current quarter will be approximately INR30 crores as we are still facing some COVID-19 pandemic-related issues with our customers. But after that, we could have about INR35 crores each of the three next quarters.

Subbu Murugesan — Individual Investor — Analyst

Okay, sir. Thank you very much. And you said that overall the revenue for next year will be INR170 crores, of which we expect INR50 crores, like about INR40 crores to INR50 crores is for the medical devices segment. So that means from the condom business, it will be about INR120 crores to INR130 crores. This is like sort of a decline from the last year and this year, right, because we like normally do more from the condom business, but I guess it’s because maybe like some of the tenders have been finished and you’re waiting for the new tenders. But if the South Africa tender is going to come in October, then maybe do you think it will pick up in the second half? Could you just tell me why we expect a decline in the condom business this year from a top-line perspective?

Om Prakash Garg — Chairman and Managing Director

Yes. The funds were diverted and relocated to other corona-related facilities, but this year those funds are being restored. And also, the new tender funds have been approved last month. So we expect more revenue in total from — especially from South Africa.

Subbu Murugesan — Individual Investor — Analyst

Okay, sir. And you also said that the South Africa tender starts in October of 2021. So when will we see the revenue sir? Which quarter will this come in? So will this come in — so if we start dispatching in October, November, December, then will we actually see the revenues coming in, in like Q3 of this year or will that be in the next quarter which will be Q4 of this year? So basically, when will we see the revenues from South Africa being booked in the financials?

Om Prakash Garg — Chairman and Managing Director

We should start to see the revenue in the third quarter of this year from October to December sales. We are supposed to start supplying the products from October 1. So it would show up in the October-December quarter results and the subsequent three quarters.

Subbu Murugesan — Individual Investor — Analyst

Okay, okay. Understood. You also said that you’ve negotiated an increase in the price with a large customer. And in the last conference call you said that you have done some efficiencies which will increase the EBITDA margins for the male condoms. But still in like today’s call you said that the EBITDA margin for male condoms is 15% to 20%. So I just found that a bit surprising. I thought with all these efficiencies and things like that, you would probably on the male condoms you might make — start making more our margins, maybe 20% to 25%. Is that correct or have I just understood it wrong?

Om Prakash Garg — Chairman and Managing Director

No, no. In some of the male condom sales, the margins have gone up to 23% and our average margin last year was closer to 18% as compared to 16% in the previous year. So we have been able to increase the overall male condom margin by couple of percent. And in terms of increase in the selling price, we have negotiated about 11% increase from our major customers, the best being the United Nations Population Fund, UNFPA, with whom we have recently signed a new three year supply contract.

Subbu Murugesan — Individual Investor — Analyst

Okay, sir. Understood. And like one last question. In the medical devices, you expect INR40 crores to INR50 crores this year in revenues. When do you see that coming in? Would it be in like Q3?

Om Prakash Garg — Chairman and Managing Director

Sorry, I missed the earlier part of your question. Could you please repeat?

Subbu Murugesan — Individual Investor — Analyst

Yeah, no problem, sir. So you basically said that from the medical devices segment you will generate about INR40 crores to INR50 crores this year, like [Technical Issue] Q4 or Q2, which quarter do you see this coming in?

Om Prakash Garg — Chairman and Managing Director

This would be approximately evenly distributed INR10 crores to INR12 crores in each of the four quarters during the current financial year.

Subbu Murugesan — Individual Investor — Analyst

Okay. So that means that the plant in like Nashik is already completed? Because I was expecting that the plant will be completed maybe by June or July and maybe we’ll only start to see revenues later in the year. But has it already been completed and you’ve already started production on the medical devices?

Om Prakash Garg — Chairman and Managing Director

Commercial production would start in July at the Nashik plant. Right now, we are outsourcing the material. But once the Nashik plant starts in July, we are expecting at a minimum INR10 crores to INR12 crores per quarter.

Subbu Murugesan — Individual Investor — Analyst

Okay, sir. Understood. Thank you very much for your time and really helpful for answering my questions. Thank you.

Om Prakash Garg — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Aakash Matalia, Individual Investor. Please go ahead.

Aakash Matalia — Individual Investor — Analyst

Yeah, hi. Thank you sir for the opportunity. I just have a follow-up question regarding the succession plan. I mean, you have mentioned rightly that it was discussed last quarter, but I would say, it has been discussed since last two years in all the con calls. But to be very honest and candid with you, sir, your HR team has not been doing anything on ground. I have not seen any advertisement on any job portal that there is a CEO requirement or anything of that sort or any kind of if you’re not able to find the talent within the system.

Om Prakash Garg — Chairman and Managing Director

No. We have been looking for the right candidate through the manpower companies, two of them. And our requirements have…

Aakash Matalia — Individual Investor — Analyst

Sir, which are those two companies?

Om Prakash Garg — Chairman and Managing Director

I don’t have the names off hand, but we can convey this to you. Please listen as the line.

Aakash Matalia — Individual Investor — Analyst

Sir, this has always been said that we’ll convey it to you, but it never — it’s never conveyed because if you see the top 10 HR portals, on that, Cupid is not listed yet finding the right — because see, to be very honest, we’ve been very happy how the way you have operated, but the new CEO, when he comes on board, he will take another six months to figure out what is happening, what are the current processes, and then he will be setting his own new processes. So it takes a year for things to [Technical Issue] but I’m really very upset that this has not been taken — this has really not taken — because I understand, since you have 49% of the share holding also. So the thing is really not moving since past three years. And it’s always been told on the con calls that we are searching, we are doing, but there is nothing concrete.

Om Prakash Garg — Chairman and Managing Director

No. Let me answer that. We have made tremendous progress in last seven years. We had introduced male condoms sales in the export markets back in 2006 and ’07. And then…

Aakash Matalia — Individual Investor — Analyst

Sir, sorry. Sir, I’m not asking about the credibility. That we have already seen, sir. We have seen that in our results. We have seen that you have now become a debt-free company. Whatever has been achieved, has been achieved because of your, you can say, leadership. But now we need to look forward for next 10 years. See this one year, two year sales will be up and down because of the COVID that is secondary. But having a process, having a proper structure in place for next 10 years, and this we’ve been asking you since past three years. I’m only questioning about the HR who has not been diligent enough. You don’t even — in your annual reports, don’t even have a proper Head of HR who is name is mentioned on the annual reports also or on their website. If you see the today’s website also on Cupid Limited, the Q4 has not yet been uploaded. We have to go to the BSE website to find the thing, results.

Om Prakash Garg — Chairman and Managing Director

While they are supposed to be published at the same time as we send the information to BSE. So our website must be getting updated.

Aakash Matalia — Individual Investor — Analyst

The independent director has signed the document and it is mentioned that it has been uploaded on your own website also.

Om Prakash Garg — Chairman and Managing Director

No, that’s what I’m saying. The document have been sent to our website people also. They must be in the process of uploading it. Now back to your question about our vision for next 10 years, we like to see Cupid Limited as a first class manufacturer of male and female condoms through the world with a profitable venture each year. And in addition, we like Cupid to expand into new businesses. And the first one we have discovered the Medical Devices business based on our research during the last two years.

So our current management is very visionary and we are keeping a worldwide watch on all the developments related to our industry. For example, we keep on tracking the budget for the current year and next year from all the major international institutions and based on that information we see where the market is going and where the opportunities are heading. And like I mentioned earlier, several condom manufacturers throughout the world are in financial tower [Phonetic]. In fact some of the units have been closed down this year, especially in Malaysia. So I would like to assure you that our vision is very clear. We want to expand. This will be a very profitable year going forward. And even if we are not able to locate a proper person for the CEO job, we would train some people internally.

Operator

Thank you. Mr. Aakash Matalia, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Yogansh Jeswani from Mittal Analytics. Please go ahead.

Yogansh Jeswani — Mittal Analytics — Analyst

Hi, sir. Thanks for the opportunity. Sir, just one clarification on order book the INR113 crore order book that you’ve mentioned, is this inclusive of both your medical device and your condom business?

Om Prakash Garg — Chairman and Managing Director

No. The INR113 crore order book is only for male and female condoms. There is no a confirmed order yet from the medical devices field. However, as I mentioned earlier, we are expecting revenue of INR40 crores to INR50 crores come the Medical Devices business during this current financial year. So that would be an addition to this INR113 crores condom order book.

Yogansh Jeswani — Mittal Analytics — Analyst

Understood. So this INR113 crores doesn’t include any Medical Device orders. Some time back, I think there were some announcement that you had made to the exchange regarding order that you had got from I think if I’m not wrong UP government for any Medical Devices or something? So is that executed?

Om Prakash Garg — Chairman and Managing Director

The first order we had executed and we had received the — all the — all our revenues, we have received it. Now we are working on the second order which is going to flow [Phonetic] and we are expecting more orders from the various state governments, especially for say this antigen corona test kit.

Yogansh Jeswani — Mittal Analytics — Analyst

Understood, sir. So, sir, on your Medical Device business, if you could dwell just a bit more on in terms of developments that you’re doing to build up your product pipeline and I think as you mentioned, I think so far we had been doing on contract manufacturing basis, but going forward we are setting up our own plant. So other than the fixed asset investments, what are the kind of efforts that we are taking in terms of developing the technological capability for these devices and what kind of money are we spending on such R&D efforts?

Om Prakash Garg — Chairman and Managing Director

Okay. We have completed the construction phase for our new facilities at Nashik and we have further ordered all the machines we require to produce the test kits for malaria, dengue, HIV and Corona, and we are in the process of getting the permission on the licenses from the FDA, local FDA as well as pest controller in Delhi. Basically, we have hired some experienced people from the market and we are — we have employed a couple of employees who are doing the research on the future possible requirements. So we are in touch with the procurement decision of major Indian states as well as some of the foreign countries. So based on their input, we would be targeting the manufacturing level for each of these items as per the order quantities.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. That’s really helpful sir. If you could also just share any internal targets or budgets that you have set for the Medical Device segment? How much we are going to spend in terms of development in terms of R&D and other related expenses? Any budget that we…

Om Prakash Garg — Chairman and Managing Director

Yes. We — the current facilities would cost a total of INR10 crore as we had mentioned in the last con call. And in addition, we would need INR10 crore to INR15 crore of working capital to run the current business. And by the way, the commercial activities is expected to start from July from the Nashik plant. Now about the R&D, we are anticipating INR5 crores of investment for the new R&D and mostly it would be through the hiring of some competent people experienced people in this line of business.

Yogansh Jeswani — Mittal Analytics — Analyst

Understood, sir. So, sir, also a related question is, we have been following the RT-PCR market MD, these devices market and off late what we are seeing is the price correction in these devices per unit price correction is been extremely, extremely sharp. I think it’s as high as 70%, 80% falling last six, seven months. So, given the kind of fall these devices are seeing and competition that’s coming up, we are seeing 10s and — 10s of players coming up and setting up capacity at a very short time. And I think from your last con call also, we understand that you are expecting respectable EBITDA margins from this business. So how do you think about the situation now looking at increasing competition, falling end product prices and in terms of able to ramp up capacities. I think it’s not just, if you are able to set up capacity in such short notice, their established players who have already expanded capacities and there are new players coming up with capacities. So how do you expect all these things to play out in terms of your competitive dynamics? If you could just share your thought process on that sir?

Om Prakash Garg — Chairman and Managing Director

Okay. Yes, it is true that competition is increasing every day and the demand side is increasing even faster than the availability of production. So the selling price, bid to bid two to three months ago, but now, they seem to have come up. We have got these UP order at a very good base price and we — Corona is not the only product for which right now there is a huge demand and, like I mentioned, it is expected to continue until the majority of the Indians are vaccinated by early next year, early to mid next year. But beyond that, there is a demand for test kits for HIV and malaria and especially from the African countries. So order book, we are expecting would improve and depending on the order book we would gear up the production facilities.

Yogansh Jeswani — Mittal Analytics — Analyst

Understood sir. That’s really helpful. Sir, one last question on this front. So I think other than COVID what I understand HIV and malaria testing is another area in which we will be focusing, right? So just to understand the market about it. So this is also a tender driven market or do we have to go to the — through the retail channel, through our distribution network. Or is it similar to how we have been doing our current business that’s mostly tender-driven?

Om Prakash Garg — Chairman and Managing Director

Mostly it is tender business, but there is also a scope for the business through the distributors as well. But mostly through the tender. International tender as well as the Indian state government tender.

Yogansh Jeswani — Mittal Analytics — Analyst

Understood. And these tenders come out just the way it is being coming out for our — like the condom business that we have. So these tenders are also floated through these organizations and we bid for them in Africa, Brazil and such countries right? Is that understanding right sir?

Om Prakash Garg — Chairman and Managing Director

Yes, yes. There is no schedule that we know of. But as soon as their budgets are firmed up and where demand is outlined, they send these request.

Yogansh Jeswani — Mittal Analytics — Analyst

Understood. So, sir, typically, what is the tender size for these contracts for HIV and the malaria in these markets? What is the typical tender they use for these contracts?

Om Prakash Garg — Chairman and Managing Director

For [Technical Issues] right now the contract size is about INR10 crore to INR15 crore, but for big tenders for HIV is more like INR40 crores to INR50 crores business and especially from South Africa which has the highest number of HIV impacted people. The tender size varies in amounts depending on the country and depending on the products.

Yogansh Jeswani — Mittal Analytics — Analyst

Understood sir. That’s really helpful, sir. I’ll get back in the queue for any follow-ups. Thank you and all the best.

Om Prakash Garg — Chairman and Managing Director

Thank you.

Operator

[Operator Instructions] The next question is from the line of Nikhil Chaudhary from Crystal Portfolio. Please go ahead.

Nikhil Chaudhary — Crystal Portfolio — Analyst

Yes, sir. Thank you for the opportunity and hope you’re taking care, All my questions have been answered. I guess one follow-up to the earlier participant. I just wanted to understand this HIV, malaria and dengue, like we will be catering to the government probably we will be having tenders, and then we’ll be participating in that. I just wanted to understand the competitive landscape as and like probably in the female condoms, we are the only guys. There are only two or three guys and we are one of them. What is the competitive scenario that is existing presently and what — so the competitive advantage do we have considering, we may not be the first player and what part of differentiation we may be offering on the table?

Om Prakash Garg — Chairman and Managing Director

Okay. First of all, there are seven to eight manufacturers already working in India to produce these types of kits I mentioned. However, the demand is increasing more rapidly than the production capacities of these existing manufacturers. So we see some business opportunities there to meet the exceeding demand. Also, we would like to be competitive in our bridge. We are looking at to 15% to 20% net margin as a minimum, in our business plan.

Nikhil Chaudhary — Crystal Portfolio — Analyst

[Technical Issues] 15% to 20% net profit margin you’re speaking, sir, on this business on Medical case business?

Om Prakash Garg — Chairman and Managing Director

Yes. In that 15% to 20% margin as a minimum.

Nikhil Chaudhary — Crystal Portfolio — Analyst

Okay. Okay. And sir, just like, wanted to understand your rationale for entering this business considering, we are already dominant guys in the condom business. We could have scaled it really well, but just wanted the management bandwidth that this would command any person — competent person that we have hired specifically for this division and any rationale has led to entering this space, considering the synergies we may be having in distribution customer base or any capacity of synergies that we have. I wanted to understand the rationale on that. T

Om Prakash Garg — Chairman and Managing Director

The main issue is the demand side. For example, the demand for male condom is much higher than the female condoms, but the manufacturers are also really in number, quite a bit, male condom as a worldwide plants with billions of pieces of capacity and in the female condoms, there are only three players throughout the world. So in spite of the lower demand, relatively speaking, we can command a better margin and also Cupid’s cost of production is one of the lowest looking at the competitive — competitors bid on the tenders.

Operator

Thank you. Mr. Chaudhary, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Mukesh Kumar, Individual Investor. Please go ahead.

Mukesh Kumar — Individual Investor — Analyst

Thank you sir for giving the opportunity and congrats to the management that they have been doing really good in this challenging scenario. I had few questions related to, first, on the regular business, which we have condom business. If we see like in FY ’20, we had INR161 crore revenue, in ’21 it came to INR149 crores and the guidance which you have shared, so that goes to INR120 crores, INR130 crores for the — in this current FY. So it’s a kind of regular — continuously reducing revenue from our ongoing business, 161 then 149 then again 130, 120 order. Do we see this downward trend to continue for next two, three years?

Om Prakash Garg — Chairman and Managing Director

No, no, like I mentioned, our current year’s top line, we are projecting at about INR170 crore, including INR40 crores to INR50 crores from the sale of medical diagnostic. So it leaves about INR120 crores to INR130 crores from the condom business and they — these going further, we see increasing demand for male condoms as well as female condoms post this COVID-19 pandemic. The demand — there are all — all the indications are that the demand will be increased going forward.

Mukesh Kumar — Individual Investor — Analyst

Yes, sir. But In the last three years you see, so INR161 crores and then INR149 crores and then INR130 crores. So it’s slowly reducing. So, anyway it’s good that you have a better clarity on [01:05:22] rewarded that. The next question is on the Medical Device business, but we have started so as of now, we are — we got the orders from UP government and I think we got the repeat order from them again. And when we are going with other medical devices for malaria, dengue, pregnancy kits and all, are we planning to use or follow the tender route for even these devices within country, because for pregnancy kits and all, not sure how will be the market inside India. So is there any option or we — are we exploring the retail or distributor channel as well for that?

Om Prakash Garg — Chairman and Managing Director

Well, most of the sales we are expecting would be through the tender business, but we are also looking at distribution network, which would be about 20% of the business according to our current projection. But bulk of the sales will be through the tender business. So, we don’t see big expenses on the — on building up a marketing team and most of the tender business is being handled by our own internal staff. Basically it’s all through emails and telephone and communicating with all the prospective buyers.

Operator

Thank you. The next question is from the line of Dinesh. Please go ahead.

Dinesh — Individual Investor — Analyst

Hi, sir. Thank you for the opportunity. So my question is like — so, like you mentioned most of our business for the condom side is from the commercial tender business and we are not really looking into building our own brand owing to the marketing expenses involved. So what I wanted to ask was, is there an opportunity for us to look at contract manufacturing for other global brands, because I know that one of the bigger — biggest contract manufacturer in Malaysia, that condom company is also looking to branch out and start its own brand, and they are manufacturing on contract basis for other global brands. So right now, they will be becoming a competitor to those brands — global brands. So is there an opportunity for us to get into contract manufacturing with a global company. So a global brands like Durex or others and take some share from that and since we are anyway one of the lowest cost manufacturers in terms of the Male condoms?

Om Prakash Garg — Chairman and Managing Director

In the past, we have looked at that, in fact we were doing contract manufacturing for brand name like Playboy USA. The problem is, that the margins are no better than the margin we are currently getting from our export sales. And also, sometimes we do not need their quantity requirements. We have about 30 repeat customers worldwide from all categories, from the institutional business to government tenders to NGOs and through private players. So some time the capacity becomes a constraint in terms of, if you look at big requirements like Durex.

Dinesh — Individual Investor — Analyst

Understood sir. Sir, my second question is regarding the U.S. FDA and the US prescription market. So you mentioned that currently we are on the clinical trial is on hold due to be COVID situation and once that that is able to resume by next January or so, you are expecting that the U.S. FDA approval should come for us. So I just wanted to know what are the actions and what are the strategies that we’re taking currently to tap the US prescription market. Because when I was looking into that, there is only one competitor there currently. And looking at their recent presentations, their sales from the US prescription market has been growing exponentially, although on a small base. So it’s a very lucrative market for us if we can get into that. So how are we looking at that? Have we set up any — have we made any tie-ups locally with other firms that can help us in distribution in the US market? And are there any challenges you see in terms of getting the approval from FDA, because I know we are already WHO pre-approved or pre-qualified. So should we then expect that the approval should not be a major challenge or is there still any concern in terms of getting the clearance from the FDA?

Om Prakash Garg — Chairman and Managing Director

Well, the U.S. FDA requirement have recently been tightened up to qualify a female condom. Now, after we submit our formal application in January, February next year to FDA, they normally take several months to review the data, to test the quality of samples and some other formalities. Now, we are expecting it will take at least six months before we get the final decision and hopefully approval. Now in terms of marketing, we are in touch with a couple of marketing companies in U.S. and they are quite interested to represent Cupid. And I agree with you that the margins in the prescription business is null. In fact one of the competitors in the plan of female condom in U.S. had a $10 million sale out of the total sale of $13 million in their last quarterly report, indicating a huge profit margin in the prescription sales. So we are eagerly looking for that opportunity, however, it will be in the second half of next year, before we start to realize some revenues and profit.

Operator

Thank you. The next question is from the line of Santosh Jain, Individual Investor. Please go ahead.

Santosh Jain — Individual Investor — Analyst

Yes, hi. As you previously mentioned that you have improved the margin in the Male condoms to around 20%, but — and you also negotiated higher prices with one of the largest customer. But if you look at your recent the reported margins they are only contracting from — on a Y-o-Y perspective. So why the numbers, the margin improvement is not visible.

Om Prakash Garg — Chairman and Managing Director

No, the new price increases, we have negotiated, they are effective April 1. So this you will see it in this current quarter results. And in some of the contracts, the margin has improved to 22%, but in other sales contract, we still have 16%, 17% margins. But we are all the time, we are looking ways to improve the margins.

Santosh Jain — Individual Investor — Analyst

So and if you look at latex prices, in the past few months April and May, how has been the latex prices moved? Have they been higher than the March quarter or they have been stable or something like that?

Om Prakash Garg — Chairman and Managing Director

No. In the last four months, the prices have gone up by at least 14%, but now that is a monsoon season in on in Kerala, we expect the prices to come down to normal levels next month or so.

Santosh Jain — Individual Investor — Analyst

Okay. And sir lastly, in your the diagnostic the testing kit business, so since you’re dealing with the government currently. So are you facing any issue in getting the payments, the receivable days high or is the payment coming on time? And why are we getting orders at a very slow pace, despite the COVID pandemic becoming so high in India. So we should have got — my sense is that we should have got much more higher orders by now.

Om Prakash Garg — Chairman and Managing Director

Yes, we — so far, we have received all our pending payments on time. We don’t have any problems. In fact, our total receivable as of March 31 has been reduced to INR27 crore as compared to INR41 crore a year ago. So cash — our cash flow has been very strong all year and our current debt INR31 crore, working capital loans was reduced to zero on March 31. So we have made significant improvement in our cash flows situation, especially in the — in our receivables encashment.

Operator

Thank you. The next question is from the line of Raghav Hans, Individual Investor. Please go ahead.

Raghav Hans — Individual Investor — Analyst

Hi, sir. Thank you for the opportunity. Sir, actually I had two questions, both are regarding the industry space actually. And sir the first question is that I was regarding…

Operator

The audio is breaking from your line sir. Please check.

Raghav Hans — Individual Investor — Analyst

Okay. One sec. Hello. Is it better now.

Operator

Sir, it’s still the same.

Raghav Hans — Individual Investor — Analyst

Just one second.

Operator

Please use the handset mode.

Raghav Hans — Individual Investor — Analyst

Yeah, this is the handset mode actually. Is it better now?

Operator

Sir, you can go ahead.

Raghav Hans — Individual Investor — Analyst

Okay. So, sir, basically I wanted to understand that — this, I was in this Condomology Report, which was recently released by the Condom Alliance. So over there they had basically saying that the market size per annum in India is INR1,500 crores for the condoms and in terms of volume its 2.3 billion pieces. So I wanted understand how much is Cupid contributing to this domestic market as on March 31, 2020? That will be helpful?

Om Prakash Garg — Chairman and Managing Director

Okay. Cupid’s contribution in the domestic market is very limited. For example, it’s about 15% of our sales are done in the domestic market, balance 85% to 90% in export sales. And the main reason for that is that there is lot of price competition in the domestic market. And margins are much better from the export sales.

Raghav Hans — Individual Investor — Analyst

Okay, got it. And sir, one thing I get our focus why is it by its on the export market is basically because of the margins. But sir, because you’ve been a veteran in the industry for so long. So I wanted to understand that sir, from 2014 to 2020, that six years, the volume of condom has grown at a merely rate of 2%. So, sir, I get our company’s focus but sir how and when do you see this trend changing or increasing. And second of all, what do you think will — can the government efforts can be focused over here to increase the awareness? Because another thing which I was reading in the report was that, for example, from the 15 to 24 who have — who are basically — there were 70% to 80% people in the age of 15 to 24 ages who do not use the condom, who are — have not used condom in their previous encounters. So how do you see this changing over five years let’s say in India at least.

Om Prakash Garg — Chairman and Managing Director

Well, the demand is on the increase in India. I don’t have the statistics about the future projection in India. But in general with our population much younger than rest of the world, I would assume that the demand going forward would be much improved and also the Government of India is promoting along with the all the states a more and more use of contraceptives to control the population growth.

Operator

[Operator Instructions] The next question is from the line of Omkar Gangurde from Sri Consultancy. Please go ahead.

Omkar Gangurde — Sri Consultancy — Analyst

Yes. Hello, sir. My question is, as several participants have already alluded to the fact that the company is undervalued and hardly it is trading at 10 times of the valuation multiple. So why don’t we hire a considering firm or a finance personnel in this which can help you to — help us to achieve the higher level of multiples as we are in this health-related business and which would also help the company to — I mean help the company how to allocate the capital more efficiently, which would ultimately drive the overall valuation of the company as we are also having around INR65 crores of cash and we don’t have any debt. So overall, I would like to know your views on that sir.

Om Prakash Garg — Chairman and Managing Director

I welcome your suggestion and we are considering, look at — looking at a three-year strategic plan and for that we may need to hire an expert related to medical field as well as have knowledge of financial. So, I think we could use one especially as you see more opportunities going forward in the medical devices field, not only in India but also worldwide.

Operator

Thank you. The next question is from the line of Subbu Murugesan, Individual Investor. Please go ahead.

Subbu Murugesan — Individual Investor — Analyst

Hello sir. My question is on the Brazilian order. You said it’s going to — the tender will be released in November and December of this year. So I just wanted to know what is the size in CR terms of this order? And if we, to be honest, if we want to get a larger share of this order and also a larger share of the South African order and maybe also get into the prescription business, can’t we just speak to Veru and then acquire their non-core business, so that we will be targeting all three areas at once, because then we will have a — basically have a greater negotiating power with South Africa, Brazil, and also maybe even get into the prescription business much faster. So I just wanted to know your thoughts on that.

Om Prakash Garg — Chairman and Managing Director

Well, two points. First of all, we have been in discussion with the government officials, both in Brazil as in South Africa about their current budgets and next year’s budgets and the volume of businesses, volume of the condoms, they would be looking for. Now in terms of acquiring this possibility to buy out the competitors, on a preliminary basis we have looked at the multi-permit, asking price and it will take at least 10 years to get the pay back, because they’re asking for a really high price, because their current margins are very high. So we are following all these developments and we will ultimately decide what is the best option for Cupid, whether to continue to concentrate on female condom and male condom business only or to look for other business verticals, which offer maybe even a better return on our investments.

Operator

Thank you. The next question is from the line of Vaibhav Badjatya from HNI Investments. Please go ahead.

Vaibhav Badjatya — HNI Investment — Analyst

Yes. Sir on diagnostic business, basically you have said that we have invested near about — we are going to invest in total INR10 crores to INR15 crores plus some working capital which is nearly INR25 crores to INR30 crores of capital investments — capital and working capital investment into diagnostic business. And by FY ’23 you expect INR100 crore of revenue with 15%, 20% margin, which seems like a very, very high return on capital employed, even in a business where, which is highly competitive and unlike our condom business where the competition is very limited. We don’t even make that kind of ROC in this business. So I think I’m not sure when you’re projecting numbers or when you’re forecasting this, how we are getting the confidence as you will be able to do this. Do 50%, 60% return on capital employed on your diagnostic business.

Om Prakash Garg — Chairman and Managing Director

Okay. First of all, our total capital expenditure on our Nashik facility would be INR10 crore. And the working capital requirement would vary between INR10 crore to INR15 crore depending on the order book. Now in terms of margins, our predictions and projections are based on the current market price for each of these products and also, the cost of production. And we see a 15% to 20% margin on these high sales volume, INR40 crore, INR50 crore this year and up to INR100 crores next year. So unless the market price, the selling price has a drastic drop, I think we should be okay in our projections. 15% to 20% margin, because the cost of production has to be controlled through utilizing more modern automatic machinery and of course least number of labor.

Operator

Thank you. The next question is from the line of Aakash Matalia, Individual Investor. Please go ahead.

Aakash Matalia — Individual Investor — Analyst

Sir I guess in the last question, I didn’t get the proper answer. So I have to come back to the queue. So, my question was regarding the succession plan. And also, why are we not promoting Mr. Durgesh Garg? I mean, from past three years, we’ve been looking out if we are not able to find, we have the COO already in place. Sir, I really don’t need an answer, which is like [Foreign Speech] But we really need, this is a high time that, if you we recruit someone at the CEO position. I know you’re holding 49%-50% of the shareholding and the composition of Board is also not very dynamic. We — you are there on the Board. Then you have Mrs. Veena Garg also on the Board, but there is no dynamic Board that we have right now. And that is the reason why we don’t have FII and DII also investing for a longer tier. If you see ICICI Bank in 1920 was just trading in our shares and made money and moved out of it. They don’t have a confidence on the Board that they will ever move their — move out of their position.

Om Prakash Garg — Chairman and Managing Director

Okay. In terms of our current staff, we are always evaluating their capability as compared to the requirement for the higher provisions. And in terms of the Board, we have two senior members with us for almost last 10 years and they have been contributing significantly to be working with our company. However, now we are open and I thank you for your suggestion, maybe to look for a new Board member.

Operator

Thank you.

Om Prakash Garg — Chairman and Managing Director

But our, yes.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Sir, please go ahead.

Om Prakash Garg — Chairman and Managing Director

I would like to thank all the shareholders who have guided us and helped us throughout all these years through their suggestions and recommendations for the improvement of working of Cupid Limited. Also, I would like to thank all our customers who have shown confidence in Cupid products through their repeat order and in many cases for several years. And finally, I would like to thank all the employees of Cupid Limited who have worked very diligently throughout the year, especially during this difficult year because of COVID-19 pandemic. So, again, I would like to thank all the shareholders for their contribution and suggestions to improve the performance of Cupid Limited. Thank you.

Operator

[Operator Closing Remarks]