Ladies and gentlemen, good day, and welcome to the Shaily Engineering Plastics Limited Q4 FY 2023 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectation of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Sanghvi, Managing Director. Thank you, and over to you, sir. Thank you very much. Good morning, and a very warm welcome to all the participants to the post-results earnings call of Shaily Engineering Plastics. I have with me Mr. Sanjay Shah, Chief Strategy Officer, and SGA, our investor relations advisors. I hope you've had a look at our investor presentation that is uploaded on our website as well as the stock exchange. Let me give you some highlights on the quarter gone by. Despite a challenging environment, we have registered a top-line growth of 6% year-on-year at INR 599 crores. The plan for the last financial year was obviously in the range of INR 700 crores based on the forecast at the start of the year. It did not fructify due to the ongoing global economic scenario. The first positive that I would like to talk about is the focus with which we are securing orders for our healthcare business. I'm happy to announce that we have onboarded our third customer for one of our autoinjectors and have also started development of a new autoinjector with automatic needle insertion. This is being developed particularly for the molecule tirzepatide. Tirzepatide is Eli Lilly's new weight loss drug and has an NCE-1 filing deadline of May 2025. Healthcare represents the second largest and also one of the fastest-growing segments. With the development and supply pipeline that we have, we are securing long-term profitable growth for Shaily. It's fair to say that at Shaily, we've made some risky bets over the last three to four years, particularly our foray into sheet metal and also setting up capacities for toys. While the numbers have yet to happen, we strongly believe in our original hypothesis that in order to move up the value chain or participate in complex products, mixed material know-how is a must for the future. It was also an extension of the excellent relationship we have built with our customer over years of high performance. I'm very happy to say that we have a very healthy order book for the current year in steel and are confident of our ability to execute the orders. Before handing over the call to Sanjay, I'd like to mention that we want to remain a margin-focused company and focus on growth that uses our core engineering capabilities, which as a result will enhance and improve our return on capital. That is all from my side. I shall now hand over the call to Sanjay Shah, our Chief Strategy Officer, to give you the operating and financial highlights. Thank you. Thank you, Amit. Good morning, everyone. I shall share with you the highlights of our operational and financial performance for Q4 and FY 2023, following which we will be happy to respond to your queries. During the quarter, we processed 4,590 tons of polymers as against 5,562 tons in Q4 FY 2022. For the year ended, we processed 20,615 tons of polymers as against 19,474 tons in FY 2022, an increase of 6% year-on-year. Machine utilization rate was 35% in Q4 FY 2023 and 42% in FY 2023. Exports during FY 2023 stood at 77% of total revenue as compared to 76.1% in FY 2022. Exports during Q4 FY 2023 stood at 72.1% of total revenue as compared to 76.21% in Q4 FY 2022. I shall now brief on standalone result highlights. Revenue stood at INR 133.5 crore during Q4 FY 2023 as compared to INR 115.6 crore during Q4 FY 2022. EBITDA stood at INR 26.14 crore during Q4 FY 2023 as compared to INR 21.6 crore during Q4 FY 2022. EBITDA margins stood at 19.5% for Q4 FY 2023. PAT stood at INR 8.7 crore during Q4 FY 2023 as compared to INR 7.4 crore during Q4 FY 2022. PAT margins stood at 6.5%. Cash PAT for Q4 FY 2023 was reported at INR 18.6 crore as compared to INR 14.3 crore during Q4 FY 2022. Coming to FY 2023 highlights. Revenue stood at INR 599.7 crore in FY 2023 as compared to INR 565.9 crore during FY 2022, a growth of 6%. EBITDA stood at INR 91.1 crore in FY 2023 as compared to INR 89.8 crore during FY 2022. EBITDA margins stood at 15.2%. PAT stood at INR 30 crore in FY 2023 as compared to INR 35.1 crore during FY 2022. PAT margins stood at 5%. Cash PAT for FY 2023 was reported at INR 63.2 crore as compared to INR 61.6 crore during FY 2022. Our ROCE and ROE stood at 12.5% and 7.9% respectively as on 31st March 2023. The growth in business has been achieved with disciplined use of capital. Our debt to equity stands at 0.47x and long-term debt to equity stands at 0.16x. On a consolidated basis, revenue stood at INR 607.1 crore, EBITDA at INR 96.4 crore and PAT at INR 35.1 crore for FY 2023. This is all from our side. We can open the floor for Q&A. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from Nirali Gopani with Unique PMS. Please go ahead. Hi. Thanks for the opportunity. Sir, the first question is on the EBITDA margin or gross margin. What led to this expansion on a QoQ basis? Nirali, there have been two things. One is, you're seeing healthcare contribute in Q4, which has led to improvement in gross margins as well as higher EBITDA margins. We've also looked to reduce our losses on our carbon steel, so that has also led to an improvement in margins. Can you help us understand a bit in detail what kind of growth did we see here? If we saw growth in healthcare, did home furnishing decline substantially? Could you please give some more color on that? No, Nirali. On healthcare, if you look at the revenue which came in healthcare in Q4 of FY 2023, was from our own IP-led devices, where we have said that we have higher margins, and we made sales of those in Q4 of FY 2023, which basically led to improvement in margins. Okay. This margin expansion was without any operating leverage. As we see the healthcare part growing or the own IP-led devices growing and even the operating leverage playing out, then what should be the sustainable margin for us? Nirali, we would not want to give a margin guidance or an advisory. We expect that the margins which we are generating would be sustained as we speak, they should improve over the period of time. Okay. On the home furnishing side, are you seeing some recovery? If you can throw some highlights on that also. We are seeing improvement. As Amit mentioned on the speech, we have also secured some additional business on the steel part of the business, which would help basically in terms of ensuring that we have much better revenue visibility from that business. On the plastic side of the business, we continue to see some growth, but it's probably still a quarter or two before you would see the type of growth that you are looking at. Sanjay, to be very honest, it's very difficult to understand the numbers for this quarter. For top line, we don't understand where the growth is or what kind of growth we are seeing. Margins have expanded substantially QoQ and YoY. It's very difficult for us to analyze the numbers, to be very honest. Nirali, margin expansion has happened purely because the product mix for quarter four resulted in a higher share of the pharma business. That has been said on several speeches before as well. Just tell me where is the confusion, and I can try to address that. No. Amit, the healthcare has grown substantially. The revenue has declined somewhere largely, right? Because revenue has remained flat QoQ. Is the home furnishing declining? Well, as a share of whatever revenue we did, INR 136 crores in quarter four, the share of pharma business was higher than the other quarters, which is why you see the margin expansion. Amit, we have done a substantial CapEx in the last two, three years. We say that we are ready for growth, but we have not seen that growth due to some or the other reason. How does the next two, three years look like? Maybe not near term, we may face some challenges, but over three years? The whole point is that when we see such challenges, I think we've had two such cycles already, is that we go back a year or we lose a year, the second year is typically a recovery year, which means that you're doing a little less than what you had anticipated two years ago. Growth is there. We see a healthy pipeline this year, certainly. The plan that essentially we have for this year is what we should have done last year. Essentially, we're back by a year at this point. The growth and margin expansion will happen as pharma scales up further. We have a very strong pipeline, I'm confident that we will see scale up. Right. On the last call also you had mentioned to utilize the existing capacity. Any update on that side? Nirali, you're breaking up. Can you repeat that question, please? I was saying that in the last call you had mentioned that you are looking at some new segments to utilize the existing capacities that we have. Any update on that side that you'd like to share? We participated. Not currently. in several opportunities, we don't have an update at this point. Okay. Thank you, sir. That was all my questions. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star then one. Our next question comes from Aman Vij with Astute Investment Management. Please go ahead. Good morning, sir. My first set of questions is on the pharma division. If you can talk about what is the CapEx we have done till date, and when is the full CapEx expected to come online. Aman, we have talked about, we are putting in about INR 120 to INR 125 crores in expansion of our pharma part of the business. That expansion would be completed between quarter one and quarter two of the current year. We're looking at then starting trial production by Q2, and then commercial production. Till date, out of that INR 120, INR 125 crores, how much we have spent, invested? We would have spent about close to INR 90 crores, INR 90 to INR 95 crores. Sure. In this division, how many total machines are we adding? What will be the total number of machines after this CapEx in the pharma division? Aman, what we are doing is we are setting up a plant in a modular fashion where we can basically put in a close total of 36 molding machines. We will basically be putting in 12 molding machines right now. Sure. Amit, on the pen side, last con call you had talked about two updates. One was we were on track to launch an autoinjector by Q1, if you can update if that will happen. Second was, we had supplied to one of our customers who was still waiting for an approval. Any update on that part? Autoinjector we launched, we also onboarded our third customer for that. It was on the speech today. Yeah. What was your second question, if you don't mind? Sorry. On autoinjector, we were talking about we will do the supplies by Q1. I'm talking about is that plan to do the supplies, not the launch, on track by Q1? Yes, absolutely. For supplies. Okay. Yes. Second question was, we had done some supplies in Q3, I believe, but the approval from the final customer was pending so that customer can launch that product. Is that approval done? Then we can get repeat orders and all those things. The approval we're waiting for is from the U.S. FDA, essentially. The customer has already approved the product. It's been filed. We were waiting, hoping for approval in April. It looks like it might be August before we get agency approval. Sure. On this GLP-1 opportunity, we keep hearing this is maybe a $50 billion opportunity combined. If you can break it in terms of what is the opportunity for pens manufacturer in terms of numbers or value, whatever you're comfortable with. Where do you see Shaily's market share in the next three, five years in this big opportunity? If you take a look at information that's available on the public domain, particularly for semaglutide, I think it was an $11 billion product for Novo last year. Out of all the players that have filed for semaglutide or will file, I think Shaily has a substantial pie of the generic market. An $8 billion product for Novo would mean about, let's assume about 80 million-100 million devices, I would assume. I could be off by a little. There is a substantial opportunity. I also don't know how much generics will gain, out of all the generics participating in semaglutide, I believe we have a majority chunk. Sure. The numbers for this liraglutide, semaglutide, and now this new molecule as well, do you see any numbers? Yeah, go ahead. Sorry. Go ahead. No, I was just asking. In terms of, I think order first, maybe liraglutide will come and then semaglutide. FY 2024 and 2025, if you can talk about where do we see the opportunity in terms of number of pens we can do in FY 2024 and 2025 from these opportunities. Particularly from liraglutide, I think it will not happen in FY 2024. Yeah, we will have some small sales in FY 2024 for liraglutide for sure, but nothing substantial. Liraglutide launch can happen, I think earliest is 2025. Likely that you will see a ROW launch in 2025 and possibly a U.S. launch in 2026 or end of 2025. That is when, if we look at first full year of launch, then we are looking at about maybe 2 million pens-3 million pens in liraglutide. similarly, if you can talk about semaglutide and tirzepatide. Sema, again, I think sema the earliest launch possible may be 2027 or later. Sema has a substantially higher volume than lira. You are looking at a 2027 launch. Earliest launch to be 2027. Again, rest of the world markets, it is possible to launch before 2027, but it will depend on each of our pharma customers. Sure. Final question on the Pens division before I move on to the other. We did a good growth in the Pens division for last year. In terms of volumes that we are targeting for FY 2024 and 2025, if you can talk about are we expecting that very strong 30%-35% growth to continue in terms of number of pens we will Own IP pens I am talking about, not the other pens. If you can give some visibility. I mean, just broadly in terms of percentage, we are looking at 45%-50% growth in pharma in the current year over last year. Even in FY 2025, we can do a similar thing? Very hard, Aman, to give you indication because it's a developing business. I think we should be able to maintain somewhere at least upwards of 30% growth for the next four years. Sure. I mean, that helps. On the Toys division, if you can talk about how much did that business sell compared to last year, and we had talked about we might see some visibility in terms of for the FY 2024. If you can talk about what are the talks with the customers currently on the Toys division. Aman. Yeah, go ahead. Yeah, I was just going to mention, you can then add to the answer. We've said that the toy industry in general has seen, and most of our customers have seen, a significant drop in sales, in their own sales. With that, what we've also seen is products have become very price sensitive. There is increasing competition from China. Regardless of what the situation is, the prices we see coming out of China, in many cases, are not feasible for us to match. What we've done is, while we actively participate in RFQs, we engage with the customer, we're not going to do it at the risk of eroding our margins or lowering our margins. We want to maintain that part of our strategy. Yes, as and when we see an opportunity which is complex enough where the customer is willing to pay a margin that Shaily needs to operate, then we will certainly participate in it. Sure. Sorry, what was the fall in the business compared to last year? How much did it decrease by? Aman, I think you're aware that we don't talk about individual numbers in individual business. It would be difficult for me to give that. Okay. In terms of visibility for FY 2024, do you see a flattish kind of number for toys or do you see some growth or? No, we don't see growth. It will be lower. Sure. On the Steel division, it was very good to hear that we got some very healthy order book in steel. If you can talk about when do we expect the full utilization of this plant to happen? Do you see it in FY 2024 or only in FY 2025? It will be FY 2025, not FY 2024. Sure. What we are seeing right now is good traction, as we speak, and we're looking at building upon that. This year, you basically see good growth on the Steel part of the business as compared to what we did last year. Sure. Just final question, bookkeeping. There was a INR 5 crore PAT difference in standalone and consolidated numbers, and the top line difference was around INR 7 crore. Is it safe to assume that the U.K. subsidiary did INR 7 crore top line, INR 5 crore kind of PAT? If you can explain that part. The U.K. subsidiary basically does a lot of development. We have onboarded customers where all of our pen project developments are happening through the U.K. subsidiary. It's highly profitable there, and that's the reason you're seeing that sort of margin. That is a sustainable trend? Hello? Yeah, I was saying, sir, is that a sustainable- Aman, sorry to interrupt you there. Yeah. If you could please join back the queue for follow-up questions. Yeah, I'll join back the queue. Thank you. Thank you. Our next question comes from the line of Pritesh Chheda with Lucky Investment Managers. Please go ahead. Yes, sir. For the pharma business growth in the current year, which was FY 2023, if you could tell us what were the drivers for the growth in 2023? Specifically product-wise, Pritesh, difficult to give that. Not product-wise. No, not product-wise. Did you add any customer or any supplies, or these were developmental supplies which brought you the growth? Pritesh. Yes, of course. We have added new customers. The addition of new customers and revenue, typically you see when we add a new customer, it starts with first the IP revenue, which is access to our technology, which you see in the U.K. Second is we have increased pen sales. Not just the pens that we contract manufacture for pharma, but also pens where we own the IP. Particularly, I mentioned that our customer is awaiting approval and is likely to happen by August, but we have made commercial sales of that pen in anticipation of the approval and filling up the supply chain. We've also made sales. These are commercial sales now. Okay. These are commercial sales. Not just development sales. Okay. Can you tell what is the volume of pens sold in 2023? Just give me a minute. I think we must have sold, Pritesh, somewhere around, hard pressed, but I think 10 to 11 million pens. This you are saying you will add at the run rate of two million to three million every year. Two million every year is what you're saying. It's not just the pens, right? When we Yes products like the autoinjector, the value moves up. Yes. The volume may be lower, but the value certainly moves up. Okay. My second question is on the metal furniture side. What is the capacity utilization in that asset, in FY 2023, and what is the EBITDA loss that asset would have done for you? Pritesh Utilization level the utilization levels will be sub 25%-28%. At an EBITDA level loss, we would not want to, because we don't set each business separately. We look at it on a total basis. Yeah, at an EBITDA level, it was negative. Okay. We expect the utilization levels to improve substantially in the current year and not be on the drag on the EBITDA in the current year. Okay. Pritesh, I'd just like to add one thing. While we don't report it on an individual segment basis, the EBITDA losses from 2022 to 2023 have dropped substantially, more than half. Revenue essentially remained flat between 2022 and 2023. Okay. My last question is on the CapEx side. We are aware about the CapEx in pharma that you're undertaking of about INR 120 crore. Any other CapEx other than this, which is to be considered? No, not currently. You have substantial capacity now because we have spent about INR 300 crore to INR 400 crore, I think, in the last five years. First of all, can you share what can be the revenues possible out of this capacity that you have created? Any CapEx decision that you take hereon will depend on what? I'll let Amit answer the second part of the question. The first part of your question, Pritesh, would basically mean for the total gross fixed assets which we have, you basically look at a revenue of about 2.25 to 2.5. With INR 100 crore of pharma coming, that number will change, right, or still that number? On a consolidated basis, that number will still remain the same. Okay. On my second question? Pritesh, on your second question, it's very clear. I said it on a call before the last one at least, that we will not make any further investments at the moment in capacities. We have adequate capacity. There will be marginal investment made on a business-to-business basis on specialized equipment, sometimes molds. When we also develop our own product, that investment is made especially in the assets to manufacture that product. Such investments will continue, but they are not going to be substantial. For us to do any substantial investment first, we're not saying we're going to do it. At the moment, the focus is on increasing our utilization and sweating the current assets that we've built. For us to do any further investment, we are really going to focus on what it adds in terms of our margin profile. There has to be a high level of engineering precision. We don't want to just create capacities and pump out product. That's not the objective. My question was, what will drive any capacity expansion from your side? Is it that you'll reach 75%-80% capacity utilization and then you will say, "Okay, now I need growth, so I'll put capacity"? I can understand you need molds for which you will create, put some money. But when it comes to fixed asset creation, what it will trigger? I believe at a consistent level we want to perform above 75%-80% before we trigger any capacity expansion. If there is a specific capacity needed, Pritesh, for a business, that is a one-off case. Any major expansion, we have to be operating at a 75% utilization level at a minimum to trigger any further expansion. Pritesh, if I were to clarify and add to what Amit said, I think your question is basically limited to not the medical side of the business, so there are other business which we have, where you're saying whatever capacities which we have created, we are underutilized, and would we make further investments in that till the time utilization levels don't improve? I think we would make investments there. We would first want to see utilization levels improve and then make investments. This is valid for all, right? This is valid for pharma, metal, and the historical business of injection molding that you're doing. Right? This answer. Generally valid for all. Pritesh, there will be specific investments needed. I also cannot tell you today, but it all depends on what kind of business we onboard and if something requires something very specific. Could be automation, could be tooling. Again, we're not adding molding capacity. Okay. Thank you, sir. Yeah. Thank you. Our next question comes from Saurabh Shah with Aum Fund Advisors. Please go ahead. Good morning, sir. Sir, question first on your utilization. I know you don't break out for the divisions. Saurabh, I'm sorry, I can't hear you properly. I don't know whether, Amit or Ryan, are you able to hear him properly? Yeah, I was able to hear Saurabh properly. Okay. Is this better? Yeah, this is much better. Yeah. Yeah. Yeah. The question was on utilization. I know you don't break out for the different divisions, just directionally, the last three years been going down seriously, and I know that you added capacity at both Rania and Halol. How should we look at composite utilization going forward, which includes the toy, where you made the comment that you probably will not do much this year. How should we see that playing out for say the full year, and what is your target? I understand you can't estimate where it will ultimately land up, based on where you stand, what kind of broad guidance can you give us over there? Sanjay, were you able to hear him? I partially heard him, partially I could not hear him. I'm sorry. Okay. I know that you said I will not hear. Just a second, Saurabh. Sure. Hello. Yeah, Saurabh. Just- Could you probably- Just a second, Saurabh. Sure. Based on what we're forecasting, from a 42% utilization that we did in FY 2023, I think it will move up to somewhere in 50%-55% range. Again, this is not a guidance by any means, but I feel that's what the calculation aims, points towards. Understand. Thanks. The next question was more broadly on the toy division. Could give us some background as to how much was invested in the business, and secondly, given the China issues just now, where do you see it? Do you think this plant can be multipurpose for some other area if it doesn't work out in the next year or two, or this will pretty much be dedicated only to the toy division in the future as well? Saurabh, the equipment which we put in are being used for other businesses also. It's not dedicated. Okay. It was made for toys, but yeah, we can use these machines for other products which we are doing, other businesses which we are doing, and we will start utilizing these machines for some other products which we have taken on. You would see the utilization levels improving there. You can basically increase capacity more without adding CapEx, say, in a year or two if this doesn't pan out as expected, is what you're saying? Yes. Okay. That's all I had. Thank you, and all the best. Thank you very much. Thank you. Thank you. Our next question comes from Amit Shah with ACE Securities. Please go ahead. Hi, good morning, sir. Sir, I have a couple of questions. Firstly, our utilization level for FY 2023 has declined. Can you give or explain the reason for the same? Also, what kind of utilization levels are we targeting? I think Amit mentioned this in the first part of his speech, that we are looking at a tough economic situation, global situation, which has been there, and that's the reason the utilization levels have come down. I think to the last question, which the other participant asked, Amit mentioned what sort of utilization levels we'll be looking at for next year. Okay, sir. Sir, secondly, can you share the split between contract manufacturing and our own IP? How do you see our own pens contribution going ahead? Split, we will not be able to share at this point. You see, a very significant portion of the pharma growth is coming from, I'd say, probably upward of 90% of our pharma growth is coming from the pens and the IPs that we have created. It's our design, essentially. Okay, sir. There's also organic growth in the devices that we contract manufacture year on year. Okay, sir. Understood. Thank you. Thanks. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star then one. Our next question comes from the line of Aman Vij with Astute Investment Management. Please go ahead. Yeah, sir. Continuing on the pens division. When we talk about we are doing, say, roughly 10 million pens, Amit, if you can talk about what is the current market size in terms of pens, both insulin and non-insulin. What is our broad market share, if you can talk about the same, and how is this market growing? I think globally, there are probably a billion pens made every year, if not more. Again, out of a billion pens, you'd see that between Sanofi, Novo, and Lilly, they would essentially control maybe 900 or 920 of those billion. Sorry. In between insulin and non-insulin? We are 10 million. You can do the math, Aman. Yeah. You're saying 80%-90% would be insulin pens in this? Sorry. Yeah. Above 80% is going to be insulin pens. Sure. You had talked about in the call, you are targeting almost 45%-50% growth in this division. You are talking about from 10 million pens, we are targeting around 14-15 million pens for FY 2024? Yeah. Like I said, I think I answered Pritesh's question, that we don't only do pens. Pens is something that we developed first. In FY 2024, we're going to see a fair bit of new revenue also coming from autoinjectors, not just pens. Okay. That is heartening to know, sir. My next question was on autoinjector part only. I believe this is much more complicated product, the realizations are maybe If you can talk about, is it 3-5x compared to a normal pen? As a mix, autoinjectors, where do you see it for, say, next year and next three years? Do you see this becoming 20%-25% of our basket in terms of pen, or do you think it will remain 5%-10% only in the next two, three years? Autoinjector side. Is the realization 3-5x or is my understanding wrong? If you can talk about this thing. I think the molecule that we have done the autoinjector for, the first one cannot be launched before 2027. At the earliest, you'll see a 2027 launch. What happens in 2027 in terms of volume, hard for me to tell. Innovator pharma companies are in a habit of often changing the device or doing something at the very fag end of when others can launch. It doesn't prevent anyone from launching, but it certainly affects how much market share they're able to gain. The second autoinjector that we're working on is a NCE-1 opportunity, where we know that there will be limited players filing. Maybe half a dozen players, plus or minus, that will eventually file. Our objective is to make sure that at least 30%-40% of everybody who files is with Shaily. That opportunity will come somewhere in, I think earliest possible will be 2032, 2033 maybe. For the second autoinjector, it's a long gestation period, but it's a very high-value product. Sure, sir. In terms of pens, we normally talk about we are targeting generic players or the product which becomes patented. Any reason we- I lost you after reason. Hello? The line of Aman has left the question queue. We move on to our next question, which is from the line of Manjeet Buria. Please go ahead. Hi. Morning, Amit. Morning, Sanjay Bhai. Just one clarification. You mentioned that despite flat sales in our carbon steel business, our losses have more than halved. I just wanted to get some more insights here because our revenues are actually a function of the commodity price as well. Can you just explain this in terms of whether our utilization has gone up leading to this loss reduction? Or is it that our gross profit per kg or per ton has gone up due to better pricing? Or it's more on operational efficiencies below the gross margin then. If you could just share more insights on what's leading to this significant improvement. Yes. Manjeet, the FY 2022 was the first year when we basically had the full year of carbon steel operations, where we were doing development and going through our learning. We basically were able to improve our operational efficiencies in FY 2023 over FY 2022. The scrap has come down very substantially in FY 2023, and we now know how to manufacture the product adequately. This would be reflected in the gross profit per ton, basically, when we say this operational efficiency has come in. Sorry, Manjeet, can you repeat that? It will be reflected where? In your gross profit per ton when the wastage comes down. Is that the right way to understand this? Yes. Okay. You're seeing, obviously, gross margins improve. Yeah. Okay. Would the utilization also have been flat between two years, or utilization this year would have been higher? No, it's actually been lower. It's been lower. It's been lower this year. Lower utilization and gross profit per ton has improved so much. Yes understanding. Okay. That's very helpful. That was my question. Thank you. Sure. Thanks, Manjeet. Thank you. Thank you. Our next question comes from Harsh Shah with Tophill Investments. Please go ahead. Hello. Good morning, sir. Good morning. I have two questions for you. First is, how do you see the current trend in the raw material prices and what will be our pass-through cycle frequency? Raw material prices are steady right now. Pass-through cycles will basically be dependent with different customers on a different tenures which we have. They basically range from anything between two months to three months to six months. I don't think there's any change in the pass-through cycles which we have. Okay. Sir, what will be the long-term ROC that business is expected to deliver in coming years? Harsh, I'm sorry, we don't give out a guidance on earnings or returns and everything. Okay, sir. Fine. Thank you. Thank you. Thank you. Our next question comes from Aman Vij with Astute Investment Management. Please go ahead. Yeah. Continuing with the question, sir. On the Pen side, if you can talk about what is the total number of customers we have supplied development orders, and to how many customers have we supplied the commercial orders as of now, and what is the total customers we have in Pen? Aman, this is getting into, I think, too much of detail, which I think you're aware that we don't divulge individual customer details or individual details. Okay. Maybe you can, sir, talk about, as of now, is most of the orders development orders or is it mostly commercial orders? I think Amit mentioned that we have started commercial orders also. Amit, you did mention that in this. Yeah. Yeah. Majority, is it still development or majority the shift has happened to the commercial side? That was the question. I think majority of not the revenue of pharma. I think majority of revenue coming from our devices would certainly exhibit batches or clinical batches, essentially. We have commercialized two molecules for which we have made commercial shipments. Sure, Amit. That helps there was this question, there are a lot of patented molecules currently. Yeah. Any reason we only target, say, generic pen manufacturer and not patented manufacturers? Because they would be also outsourcing from somebody, right? If you can talk about the same. Aman, first, someone has to realize that Shaily is doing a good job. For large companies to realize that, they need to see product on the U.S. market. Let's hope that our first product launch will enable us to work with the big guys. Sure. That is in your thought, right? Eventually trying to target. Very clear. Very clear. Yes. Very clear. Yes. These were the questions from my side. Thank you. Thank you. Thank you. Our next question comes from the line of Nirali Gopani with Unique PMS. Please go ahead. Yes, sir. Of course, recently we heard that Walmart wants to source a quite significant number from India. Do we see an opportunity there for us? Nirali, again, talking about specific customers will be not right on a call. We continue to have dialogues with multiple players is what I would say. Okay. This includes toys also, like having discussions with a lot of customers to supply toys also? We are in discussions with a couple of people, but not much. As Amit mentioned, we see challenges on margins, and we then want to concentrate our energies where we see that we can basically get the type of margins which we want. Right. Sorry. Okay. That's it. Thank you. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you. Thank you everyone for joining the call. We hope that we've been able to answer your questions adequately. For any further information, I request you to get in touch with SGA, our investor relations advisors. Again, thank you very much and have a nice day. Thank you. Thank you, everybody. Goodbye. Have a good day. Thank you. On behalf of Shaily Engineering Plastics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.