Ladies and gentlemen, good day and welcome to Sequent Scientific Limited Q2 FY 2024 earnings conference call. 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 and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek. Thank you, and over to you, sir. Thanks, Sagar. A very good morning and thank you for joining us today for Sequent Scientific earnings conference call for the second quarter and half year ended FY 2024. Today we have with us Rajaram Narayanan, Sequent Managing Director, Sharat Narasapur, Joint Managing Director, and Saurav Bhala, CFO to share the highlights of the business and financials for the quarter. I hope you've gone through our results released in the quarterly investor presentation, which have been uploaded on our website as well as the stock exchange website. The transcript for this call will be available in a week's time on the company's website. Please note that today's discussion will be forward-looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the investor relations team. I now hand over the call to Raja to make his opening comments. Thank you, Abhishek. Good morning, everyone. A very warm welcome to all of you on this call for the quarter two earnings call for the financial year 2023, 2024. Joining me on this call is Mr. Sharat Narasapur, Joint Managing Director, and Mr. Saurav Bhala, our newly designated Chief Financial Officer. A bit about Saurav, for whom this is the first investor call here at Sequent. Saurav brings with him a wealth of leadership experience in finance and operations across pharmaceutical, chemical, and FMCG sectors. Saurav was with the Godrej Group for 16 years, with the last five of those as the CFO for Astec LifeSciences, which is the NSE-listed chemical manufacturing entity of the Godrej Group. On the same note, I would also like to extend my thanks to Raghav, our outgoing CFO, who had to relocate out of Mumbai for personal reasons. His contribution to the company has been invaluable, and we thank him for his service. Moving on to the performance for this quarter. In the last earnings call, I had shared with all of you about the various initiatives around cost and commercial excellence across both API and formulation that had either been implemented or were in the process of being implemented during the last few quarters so that we could meet our priority of profitable growth. I am really pleased to share that we are progressing well towards that goal, and the results of those initiatives are beginning to reflect in our financial performance. Before diving into the specifics of our performance, I would like to briefly touch upon the macro environment, which is relevant to us given our geographical spread. Across all our markets, inflation remains at elevated levels. While on one hand, this is putting pressure on the end consumer demand, it will be beneficial for companies which are competitive in cost and have a strong franchise of quality customers. We see our company getting ready to win in such an environment. We also see some green shoots of recovery in demand, and this is evident in the sequential growth we've witnessed in some of our formulation markets. These indicators, along with the reshaping of our operations on ground, seem to indicate that we should see momentum early in the next calendar year, which is our last quarter of this fiscal. As I've explained before, our industry has two segments, medicines for production animals and medicines for companion animals. While the production animals business globally was impacted by high feed costs, input costs, and issues related to war and farm productivity, there seems to be some softening of input costs of late, which would help in the revival of demand in a couple of quarters. At the same time, the demand for companion animal medicine is beginning to accelerate, and we too, as a company, are reshaping our portfolio to meet this trend. While Saurav will talk in detail on the quarter financials, let me share some headlines of our overall results and also give you a sense of the direction going ahead. Our overall revenue in the quarter has come in higher, growing at 3.8% sequentially and 2.5% year-on-year. We must note that this is after the discontinuation of some of our less profitable operations in Europe. Thus, the growth of the retained and continuing business is higher and will begin to show an annualized positive impact by the end of the year. We are also progressing well on our plans, which have been designed to help us deliver consistent quality, profitable growth. During the quarter, our EBITDA margins, pre-sub cost, have expanded by 480 BPS to 7.6%. This is in line with the direction we have given during our earlier calls on profitability. Starting with the performance of our Europe operation, the actions that we have taken in the Europe market have begun to give positive results, and these are reflected in the margin expansion we are seeing in this quarter's financial results. The portfolio reshaping, which involved exiting certain unprofitable businesses and increasing our focus on growing certain attractive product lines, is now largely complete. This positions us well for the next leg of growth. We are on course to build a strong portfolio in phytosolutions and gut health products as we expand these launches to other markets outside of Europe. In Turkey, we continue to deal with high inflation and currency devaluation, but I'm pleased to share that the price interventions that we put in place in quarter one have started to yield results, and these are reflected to some extent in our quarter two financials. Turkey is one of the leading markets in the world for animal health, and our company has a strong presence there. We continue to take proactive measures both on cost excellence and further price intervention, given that we are inherently strong in that geography. We are also launching new products and injectables for ruminant animals later in this year. Of course, we remain cautious till the current economic initiatives stabilize. The formulations business in India has remained steady, with sequential growth on the back of new products as well as expansion of the team on ground. The year-on-year decline is mainly on account of a high base quarter last year due to breakout of the lumpy skin disease in quarter two 2023, and also a short-term non-availability of one of our key product lines this quarter, which will be restored by the end of this year. Coming to our API business, we are midway through the implementation of Project Pragati, which is a comprehensive cost improvement and commercial excellence program. The business has seen a healthy margin expansion this quarter on the back of the initial work. During this quarter, our Visakhapatnam facility underwent a U.S. FDA inspection, at the end of which we had one procedural observation and a response to which has been shared. The U.S. FDA audit completion will continue to strengthen our presence in regulated markets while also opening new opportunities. This is truly a good achievement for the company. While we make continuing progress on operational and cost excellence, the market demand continues to be a bit erratic due to pricing pressures and high inventory levels amongst some API customers. In line with our priority of high-quality revenue, we will remain disciplined in these kinds of situations and await a gradual pickup in volumes towards the start of the calendar year in 2024. Before I hand over to Saurav, I would like to emphasize that in spite of a volatile environment globally, we are beginning to see sequential and profitable growth in most of our markets. While our priority this year is more focused on margin improvement, the foundation for acceleration has been set, and we are well-positioned for acceleration on the back of these operational improvements. On the M&A front, we will continue to look for appropriate assets and partnerships. We believe that on the API side as well, we must keep our options open for inorganic growth to build scale, enhance backward integration across promising products, and accelerate investment towards R&D talent and infrastructure in API. I'll now hand over to Saurav for more details on the financial performance. Thank you, Raja. Good morning, everyone. I'm excited to be part of Sequent's transformation journey and work closely with our exceptional team, whose solid views drive Sequent's position as a prominent global player in animal health sector. I'll now briefly update on the key financial metrics of Q2 and H1 financials at 2024 respectively. Q2 highlights as follows. Our total reported revenue for the quarter is INR 3,460 million, up by 2.5% YoY and 3.8% QoQ. Formulation business contributed INR 2,532 million to the top line, with a growth of 5.2% YoY and 2.2% QoQ. We have seen a good boost in our European operations driven by our strategic actions focused on portfolio reshaping. Europe clocked a revenue of INR 1,191 million, which is a growth of 30.7% YoY and 1.6% QoQ. Our decision to implement substantial price increases in Turkey has helped us improve our margins effectively without impacting the sales much in that geography. India business clocked a revenue of INR 273 million, which is a growth of about 7.6% QoQ. We faced some headwinds in emerging markets, that is basically due to unavailability of US dollars to make the payments in some key markets which we operate in. Overall, emerging markets has grown by 1.5% QoQ. Our API business revenue stands at INR 804 million against INR 908 million. Overall gross margins for the quarter are at 45.1% compared to 41.5% in previous quarter. Our gross margin has seen significant improvement driven by product shift in our product mix, various cost saving initiatives which we have initiated, and a very well-executed price increases in some of our key markets like Turkey and Spain. This demonstrates our commitment to enhance profitability and financial health of the company. In Q2, EBITDA, excluding the ESOP and FX movement, stood at INR 263 million, which is at 7.6% of our revenue. As against INR 150 million in Q2 FY 2023, which is at 4.4% of the revenue. Through the various operational reorganization driven in last few quarters, we have been able to manage our operating cost pretty well. Our total operating expense is INR 697 million as compared to INR 713 million during the previous quarter. Employee cost is INR 602 million, against INR 678 million in the previous quarter. The slight increase is due to one-time settlement initiated as a part of the overall operational reorganization process. I'll move on to H1 highlights. During H1, our total reported revenue is INR 6,792 million against INR 6,789 million last year H1. Our formulation business contributed INR 5,014 million to the top line. It is a growth of 3% YoY. API business is at INR 1,611 million against INR 1,794 million last year H1. In H1, EBITDA excluding ESOP and FX costs stood at INR 336 million, which is 5.2% of the revenue as against INR 351 million last year, which is almost on the same range, 5.2% of the revenue. Hyperinflation selected impact driven by Turkey is reflected in our Ind AS 29 adjustment, which is shown in the financial also, and that is INR 25 million in Q2 FY 2024 as against INR 33 million Q2 FY 2023. For H1 2024, the impact is INR 62 million against INR 74 million last year. We have an exchange loss of INR 26 million in the current quarter, almost entirely driven by the depreciation in Turkish lira. This is exchange gain of INR 11 million in Q2 FY 2023. Our working capital now stands at INR 3,595 million as compared to INR 4,601 million as of March 2023. That is majorly driven by our focus on effective working capital management. Our net debt as on date is INR 3,591 million as against INR 3,561 million in March 2023. Those are the key highlights. I thank you all for your support, and I now request for the forum to be open for Q&A. Parker, we can take questions, please. Sure. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vimal Jain, who's an individual investor. Please go ahead. Hi. Thank you for the opportunity. My questions are regarding the API business. API sales have been flat sequentially. When can we expect a recovery, what will our full number look like? Secondly, how many products are in the API pipeline, and how are you expecting those to drive sales going forward? Thank you. Thank you. API business is clearly not the level at which this business will steady itself at the current INR 80 crore-INR 81 crore level. As I spoke about this is a business which is more likely to be closer to a three-digit level in terms of an average. We expect that kind of a number of coming closer to INR 100 crore to be reached soon. At this point of time, some of the transformation initiatives that we have taken have indeed subdued some of this sales. In addition to that, of course, there is some pricing pressure which is there in the market on some of our products, because of which we have decided to stay away from low margin, low quality opportunity. I'm of the view that with the initiatives that we have, as well as the visibility that we have to some of the projects and contracts, we should be back closer to a level of INR 100 crore the quarter, which is what we have indicated earlier. We expect that to be reached definitely early next year. Coming to the second question of how many products we have in our pipeline. I think every year we typically file three to four new dossiers, and these filings are normally in line with R&D plans. At this point of time, we would typically have between three to four projects which are in the pipeline for the next year. Of course, in line with our plan to have three to four every year, further products are also under development. Thank you. Mr. Jain, you have any more questions? No, that's it. Thank you. Thank you so much. The next question is from the line of Shantanu Maheshwari, who is an individual investor. Please go ahead. Hi, good morning. I have two questions. First is on Turkey. The Turkey business seems to have improved this quarter or given the micro challenges there. Is this performance sustainable? The second one is on the India business. What is happening on the India formulations business? It is meant to be one of the growth focus areas. Sorry. Can you just repeat your question once more slowly, because it's not very clear for us, yeah? Yeah, I'll say that again. My first question is on the Turkey business. The Turkey business seems to have improved this quarter, given the macro challenges there. Is this performance sustainable? The second question is on the India business. What is happening on the India formulations business front? It is meant to be one of the growth focus areas. Thank you. That's clear, Shantanu. On the first question on Turkey, I think the Turkish market is not completely out of the woods, but I think there's a sense of some clarity coming on both the economic policy as well as the market demand. From our side, what we have done is to focus on three areas. The first is in the area of pricing, because it's a high inflationary economy, and we have taken bold pricing decisions in that market because of our market presence, and that has gone through very well. We believe that pricing will continue to be some lever which established companies like us can continue to exercise, and therefore, I think we will be able to match much of the inflation with some of our pricing decisions. The second part of it is really on exports. We have been saying before that Turkey is a base for exports, and we are seeing increase in our exports from Turkey, and that will form a natural hedge for foreign exchange for us in Turkey. That will take care of the exchange fluctuations which take place in Turkey. Having said that, after one initial sort of change in the exchange rate right after the election, we are beginning to see some sort of stability in the current Turkish foreign exchange situation. The third, of course, is that Turkey is a very large market for animal health, and it is important to keep innovating and launching new products. In a situation like this, the smaller players tend to fall out of the market or get impacted, and we are seeing that happen. Therefore, our market share is actually increasing in Turkey, and that is on account of some of these initiatives, but also because we are launching new products. A combination of new product launch, pricing, as well as exports, I think will keep this business pretty steady going ahead. Of course, given the situation there, we are watching very carefully. We expect that this is a market where the results can only be positive going ahead. On the second part of your question, what's happening on India formulation. The India formulation business for us is performing well. It is a combination of two parts. One is our own products, and the second is a distribution business that we do for one of the largest multinationals. On both these fronts, we are continuing to grow in line and slightly ahead of the market. We are also launching new products, so that's what you're seeing in the results. Of course, this particular quarter, there is a bit of an aberration because last year at the same quarter, there was a big breakout of the lumpy skin disease in the ruminant animal market, because of which there was a disproportionate jump in medicine consumption. That has eased a bit this quarter. Also one of our products which we distribute was out of stock for various manufacturing reasons, and that is expected to come back in the next quarter end, and therefore, we should begin to see that stability. We are, of course, very confident that India will be a steady growing market, and that's something we have said before, and we continue to stay by it. We will keep our eyes open for any kind of partnership opportunities to take this business further. Wonderful. Thank you for answering. Thank you. Participants are requested to use handsets when asking a question as well as in order to ask a question right now, please press star and one. The next question is from the line of Darshat Shah from Sabnis Financial. Please go ahead. Good morning, sir. Am I audible? Yes, Darshat. Please go ahead. Yes. Sure, sir. One of the first questions I had was, there's a visible increase in gross margins during the quarter when I compare it to YoY and QoQ. Can you give me a sense of what are the major contributors to it and what are the steps you're taking to ensure that this is happening? Thank you, Darshat, for this question. I think we've spoken earlier as well in the last two calls, that we have a few initiatives across the company to improve gross margin, and those have started now giving the results. These required some tough calls, which we took in the last couple of quarters. If I really split it into two, the API side, we have a project called Project Pragati, which is a comprehensive cost improvement program, and that is beginning to give us results as we're getting more competitive in our product pricing, in our cost structure, and that is, of course, improving the gross margins of our API business. The second part of it is really the mix of products we are selling. We are, of course, focusing more on quality customers as well as products which are the higher margin accretive and therefore we are seeing the second lever play out now. The third is that on a formulations business, both in Europe as well as in Turkey, it is a combination of getting out of low margin product mixes, focusing on high margin products and also on some aggressive pricing action, given that we are in an inflationary environment. The last part, of course, is there is better management at the end of procurement, so there is some softening of prices as well, which are coming to play for, in beneficial for us. I would say that there is a very comprehensive set of actions. This is in line with what we've been speaking for the last couple of quarters, that we intend to take our margins, by the end of the year, towards the double-digit kind of a margin. That's the direction in which this quarter as well is going. Anything else, Saurav, from your side to add? No, I think you have covered pretty much. Yes. Thank you, sir. That was comprehensive. Next, I wanted to know our increase in employee cost. Have we had some key signings or senior management signings or something like that? I'll leave that to Saurav to answer. Yeah. Darshat as I also mentioned briefly in my introduction, the employee increase is one-time expenditure which we are paying for all the operational re-organizations we are doing across our geography. This is one-time expense. This is not normal, and going forward, we'll see all this normalizing back to the normal level. In fact, we'll see improvement going forward post our restructuring. Okay. Thank you, sir. I've just a couple of questions on strategy moving forward. In the Europe business, you've guided that you moved out of some unprofitable businesses. just I wanted to know, what will be a long-term strategy for this continent in Europe? Europe, for us, is important. At the same time, it is a business that we need to run profitably. We have two kinds of businesses. We have our own manufacturing operation, which is there in Spain, which is an important market for us. It is also one of the largest animal health markets in Europe. In Spain, having sort of restructured and rationalized the portfolio, we are now, of course, expanding with new product launches. We continue to launch new products in Spain in the area of ruminant animals, which is production animals. In the area of companion animals, we have increased our distribution footprint. We are now distributing more companion animal products in the area of pet care. We are also there in Belgium, we are there in Netherlands, we are there in Scandinavia, and we are setting up some distribution opportunities in other markets in Europe as well. Overall for us in Europe, the first stage was to make sure we have a profitable portfolio, and now the next stage of it is of course, to expand through new launches as well as new distribution arrangements. Okay. Okay, sir. Sir, a follow-up on that is that we've mentioned that we generally cater to two types of lifecycles, companion and food consumption. Just can you name a couple of animals that you primarily or our products primarily cater to? These could be cattle, horses. Just an idea of that. Look, this industry, when you say production animals, which is meant essentially there is cattle, which is bovine cattle, and then there is swine. Of course, there are also other production animals which are used for food like poultry. That's really the segment that we are in. On companion animals, of course, it tends to be the typical pets like dogs and cats. Beyond that, we're not more sophisticated than that. I mean, we just leave it at production animals and companion animals. Okay. Sir, Can we take this as a last question because I think other people in the queue. Yes, sir. Sorry, sir. My natural extension to that question would be, what will be our geographical mix in terms of, are we also going to focus on countries such as Argentina or Mexico or other markets such as China or even Australia because they also have a large bovine cattle U.S. How is that? Is that something that is in plan for the company? Mr. Shah, may we request you to repeat the question. We'll probably just come back to this at the end if we have some time, yeah? I'll take the question at the end. Okay. Yeah. Sure. Yeah. The next question is from the line of Nikhil Shetty from Nuvama Wealth Research. Please go ahead. Yeah, thanks for the opportunity, sir, and congrats on a decent recovery in Q2. Sir, can you provide some clarity on capacity utilization level in API business and how albendazole is doing? Sharat will probably give you a sense on our capacity utilization. Sharat. The capacity utilization has been about 70%-75%. It's hovering around that. While we see that the volumes have picked up, in some of these molecules, deworming molecules. However, there is a pricing pressure because of the reasons which Dr. Raja already elaborated. Coming to albendazole, yes. It's the same story. The volumes are not as high as they used to be because of muted demand in Europe, because weather conditions. Otherwise, the key differences we have built in albendazole are really, really intact and they are staying. On the capacity front, just to add, there are two parts. One is, of course, we are at 75% capacity. Also some of the initiatives which we have done in Project Pragati, which is really on manufacturing excellence as well, that itself also has helped us ensure that there is adequate capacity available for Laparum for both it going ahead. Yeah, okay. Great, sir. Sir, I understand currently our focus is on cost and margin improvement, and you also provided guidance on the same for 2024-2025. It would be great if you can give us a sense on revenue growth for 2024-2025 as well, because I believe targeted margin cannot be achieved solely based on the cost control measures. Look, we have given you some indications earlier, but I think at this point of time, it's very clear that this margin growth is a state we want to reach in quickly and then begin to accelerate our top-line growth as well so that we are able to actually get the leverage from it. Because that's when there is a real benefit. I think towards a bit more clearer guidance on the top-line growth, we'll probably give it to you next quarter, as we first play out the entire market scenario. Suffice to say that, what we had said earlier, that our ideal situation would be that we would be in early double-digit top-line, which is low teens in top-line, and moving towards mid to high teens in bottom-line growth. That's really the structure that we would like to reach in the next two to three years. Yeah, that's great. Lastly, if you can help us to understand overall how much cost we can save on an annual basis from these cost optimization measures we are taking. I wouldn't want to guide you specifically on that. I am sure that when you see the results of the forward quarters, you'll then be able to annualize it and then make that estimate. At this point, I can't give you that specifically. Does this quarter include a major portion or it will reflect in Q4? Nikhil, this quarter has just started flowing the benefit, which is not a major reflection. The benefits majorly will start reflecting from Q4 onwards. Q3 will see that improving from the current quarter, but the major benefits, one part of it will start to from Q4 and onwards. Q4 is when you should look at it more closely. Sure. Yeah. Thanks, sir. That's it from me. Thank you so much. Participants who wish to join the question queue may please press star and one at this time. The next question is from the line of Vishal Manchanda from Systematix. Please go ahead. Thanks for the opportunity. Thanks, Vishal. A question on the API business. Could you share if we are exploring any CMO opportunities there, and what's the status of the CMO contract we had earlier got from a global innovator? Yeah. Thank you for this question. Yes, CMO continues to be something that. It's actually not exactly a CMO. It is also with some custom-made participation which is there, so they are custom generic that they're developing. The important thing is that we do have a couple of contracts, which we have spoken about earlier. Some of these are taking a little longer to commercialize, so we should begin to get some benefit of this towards the end of this year and then, of course, towards next year from a commercialization opportunity on the contract that we spoke to you earlier about. Of course, there are other conversations which are also on, and we see ourselves becoming more and more attractive as a company where a large sort of global players are keen on partnering with us for this. Because with the recertification of our U.S. FDA status, we definitely would be amongst the few fully dedicated veterinary API companies around. With the increasing need of companies across the world to diversify their supply footprint and move towards India, that's something that we see as an emerging opportunity. Those things will take some time to play out in the next year. We've been in a range in the API business, say around INR 90 crores ballpark per quarter. Any timelines when we expect to kind of break out of this range and maybe do in excess of INR 100 crores per quarter and then build on from there? Certainly, next year we are looking, and as we begin to start from quarter four itself, we should look more at averaging at the three-digit mark, at least on an annualized basis. That's what we should look at the first sort of destination for us. Then when some of these CMO partnerships fructify, we should see the next acceleration happening after a year. Okay. Do we need capacity expansion next year or the year after? Certainly, for next year, we do not see any need for capacity expansion because we have managed, thanks to some of the work which we have done to debottleneck some of our operations and make sure there's capacity available. Of course, when you get a very large CMO contract, you will begin to look at some capacity expansion. Of course, also when three or four of our new products begin to commercialize and get scale, that's when we will need some capacity expansion, but not for next year. Okay. Just one on Turkey. This used to be quite a profitable business for you at a point in time. Is it still profitable after the price increase? Is it at the same level as it used to be earlier? We are beginning to reach closer to the levels at which we were. I think on a steady state basis, this business will be closer to the profitability that it used to be. Certainly in the constant currency terms, it is. The question really is to make sure that when it is translated in our currency, then it becomes profitable. That's what the current efforts are. Because it's not just about pricing, it's also about hedging for foreign exchange and making sure you're launching new products. We expect it to come back to the kind of levels by next quarter. It's already actually beginning to come closer to that, but to make sure it's a steady state, we should wait for one or two quarters. Can I squeeze in one more? Yeah, please do. Yeah. There might be geographies which are currently are candidates of turnaround in terms of they may be loss-making. Any opportunities that you see imminently within your portfolio that you can turn them around into good profitable businesses? I think generally, most markets, we've been profitable. It's just that in some markets we lost profitability. Not that we've had any losses in any of those markets, but we lost some profitability in Europe. That's more or less come back to the original levels. Turkey should come back to the original levels soon. We have to keep an eye on Brazil, of course, because at this point of time, that's the market which is important for us, and we need to hold on to our performance there. I don't see any big turnaround issue. I think the bigger opportunity there is that now that we have settled to a new level of margin, how do we accelerate our top line and get the leverage? Our focus ahead is really going to get our top line, given that we would have reached a reasonable steady state of margin by the end of this year. Got it, sir. Thank you very much. Yeah. Thank you. Thank you. The next question is from the line of Mr. Nakul Joshi from Winshine Financials. Please go ahead. Thank you for the opportunity. I have a couple of questions starting with the revenue and EBITDA margin guidance for H2 and the full year. What would be our margin guidance as our margins have fluctuated quite a bit in the past? Look, we've given a sense that we should exit the year at double digits of margins, That's a guidance more or less we are holding on to. I think the quarter gives us confidence that we are in that direction. That's at this point of time, the only thing I can tell you about this year. As far as revenue is concerned, as I said, it's a bit more complex for us right now because there is a continuing business revenue, which is really, if you remove some of the restructuring one, two, three have done, that is of course growing at a much higher rate. Then if you net it off with some of the businesses that we have decided to close, the revenue would come down to low single digits. The revenue I expect will be more like a low single digits this year because of the restructuring. Going ahead on a continuing basis, because we would largely be left with the retained profitable business, we should expect this piece of it to accelerate. As I said, this is something that in the past also have indicated that over a three-year period, we would like to be in the early teens as far as the top line is concerned and in the late teens as far as margins are concerned. Understood. Going forward, how do we see our debt position? Are we comfortable with the current levels of debt, or are we looking for any restructuring? Yeah, Saurav, there you go. Nakul, currently our gross debt to equity is at 0.61 and our net debt to equity ratio is at 0.53. We would say we are okay with this, but our focus is on reducing that, and we are looking at various options to bring it to a lower level. We hope that in coming quarters, we will work on that direction and in keeping these levels down. Generally, just to build on what Saurav's saying, I think we are fairly clear on where we stand right now with our debt situation, and our actions are to make sure that we are always comfortable on this front. Yes. That will be the priority. Understood. That's it from my side. Thank you. Thank you so much. The last question is from the line of Ms. Saloni Shah from SK Investors. Please go ahead. Hello, sir. Good morning. I just have one question. What are the implications of U.S. FDA in context to the API business? If you could just throw some light on that. Sharat, what were the implications of this FDA on API? We have this inspection twice a year which was a routine GMP inspection. In order to make sure that the firm is maintaining the GMP standards and is fit to sell its goods in U.S., this inspection was conducted. That gives tremendous amount of confidence to customers that we are there in the business, and it also opens up new opportunities, since the track record has been really good. Yeah. I think doing it for three consecutive inspections, I think it will give much more confidence to our customers. Especially the customers who are looking for new projects and opportunity, because they would like to work with organizations where there is a continuity of supply and quality. I think that's the kind of opportunity which we will unlock going ahead on this. Okay, thank you. Okay, sir. Thank you so much for answering my question. Happy Diwali in advance. Thank you. Thank you so much. I would now like to hand the conference over to the management for closing comments. Thank you very much to all of you who have attended this, and wish you all a very happy Diwali from all of us at Sequent. Thank you for staying with us, and look forward to meeting you next quarter at the same investor call. Yeah. Thank you. Thank you. Thank you. On behalf of Sequent Scientific Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.