Ladies and gentlemen, good day and welcome to Sequent Scientific Limited Q3 FY 2024 earnings conference call. As a reminder, all participant lines will be in 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. Abhishek. Thank you and over to you, sir. Thank you, Ria. A very good afternoon and thank you for joining us today for Sequent Scientific's earnings conference call for the third quarter and nine months ending financial year 2024. Today we have with us Mr. Rajaram Narayanan, Sequent Managing Director, and Mr. Saurav Bhala, CFO, to share the highlights of the business and financials for the quarter. I hope you've gone through our results release and the quarter presentation, which have been uploaded on our website as well as Stock Exchange website. The transcript of this call is 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 Mr. Rajaram to make the opening comments. Thank you, Abhishek. Good afternoon, everyone. A very warm welcome to everyone on the call for the quarter three and nine-month earnings for the financial year 2023/2024. This is the first call of the new year. I wish you all a very happy new year and a good start to 2024. Joining me on this call is Mr. Saurav Bhala, our Chief Financial Officer. Moving on to the performance of this quarter. Over the last few earnings calls, I have emphasized how we have been undertaking multiple initiatives towards making our business more competitive. I am pleased to share that many of those initiatives, particularly around improving profitability, have now begun to reflect in our financials. Over the last few calls, I have indicated that we were working towards exiting the year with a double-digit EBITDA margin pre- ESOP costs. I'm really pleased to share that we continue to improve our margin and the EBITDA margin pre-ESOP costs for this quarter stood at 9.2%. The EBITDA pre-ESOP costs also grew 15% sequentially and 9% on a year-on-year basis for the quarter. On the revenue side, however, we've been focusing on building a quality business with high-quality customers and a strong, sustainable portfolio. Adjusting for the discontinued operations in Europe and the currency depreciation in Turkey, our sales have grown 1.3% on a quarter-on-quarter basis if you translate in INR terms, and 2.5% on a constant currency basis. With now most of the restructuring behind us, we feel confident that the business is ready for acceleration. Before getting into more specifics on our performance, I would also like to touch upon the macro environment, which is relevant to us as we operate in multiple markets. In most countries, inflation continues to be a worry, and the recent geopolitical events have also made most businesses cautious. At the same time, we are also seeing central banks and the economic ministry intervening very aggressively to stimulate demand. We believe that at such times, companies like ours will have the opportunity to leverage our strong front-end presence and create even a more stronger competitive position in these markets. As I explained earlier, our industry has really two distinct segments, medicines for production animals and medicines for companion animals. Over the last few years, the production animal business globally was impacted by high feed costs due to issues relating to war and farm productivity, and this in turn impacted the demand for medicines. On the other hand, the demand for companion animal medicines has remained intact and are growing now as pet adoption, incidence of diseases, and lifespan of pets is increasing. We are the leading animal health company from India with a presence across over 100 countries in both regulated and less regulated markets. Our business is a combination of strength, our formulation business with a front-end presence in key growing animal health markets of the world, and supported by a strong API backend with an established U.S. FDA-approved API facility supplying primarily animal health APIs. We have a unique platform in that sense. We believe that our backend API operations will give us a good base to help us capture the growing and emerging opportunities which are there in formulation. At the same time, help us supply to some of the largest customers independently while customizing for their requirements. As mentioned in the last couple of calls, we have taken some decisive structural action for long-term competitiveness on the back end of our API side as well as the formulation side. We believe that from here on, using a combination of both organic and inorganic opportunities, we will continue to have a unique place into some of the largest markets, adding value to all our stakeholders. While Saurav will talk in more detail on the quarter three and nine-month financials, I will share with you some highlights of the overall results. Our overall revenues in the quarter came in lower, declining by 5% sequentially and 12% year-on-year. Our formulation business, post the Turkey hyperinflation adjustments, declined 1% sequentially and 3% year-on-year. These metrics do not consider the impact of some of the divestments and discontinuation that we have done of our loss-making, unprofitable units, as well as the adverse translation impact in the currency in Turkey. Adjusted for this, our total revenues actually grew sequentially 2.5% over quarter three FY 2024 in constant currency. In some areas, our performance has really picked up. For example, in the performance of our European operations, the sequential growth is at 6.5% and year-on-year performance at +20%, demonstrating the impacts of the strategic actions that we undertook a few years ago, like the discontinuation of loss-making operations in Germany and also some smaller sales units elsewhere in Europe. Demand has been driven by a sharper focus on more attractive and high-growth segments, such as gut health, where we are now expanding to many global markets. Operating efficiencies, combined with a considerably favorable product mix, have aided our margins in Europe, and this is reflected in the quarter's financial results. With this, we have reason to believe that the next level of growth in our European operations is underway. In Turkey, the inflation has remained at elevated levels and currency devaluation has continued, although at a more predictable rate. I'm pleased to share that the decisive price actions we took in June last year have continued to yield positive results, reflecting in this quarter's performance. Turkey is one of the leading markets in the world for animal health, where we are among the top three players in the ruminant segment, and we are committed towards strengthening our position. Turkey is now accelerating new launches and exports. Recently, we launched Tulaject, a generic form of injectable tulathromycin in Turkey, and we will be building our portfolio with more launches in the coming year. The India formulation business recently launched three new brands from our international portfolio. As I mentioned earlier, India is a priority growth market for us, and we continue to remain excited by the prospects. In terms of quarter three 2024 specifically, this was a weaker quarter due to the supply disruption in the availability of one important product which we distribute, but we expect this to be resolved in the coming quarters as distribution gets restored. Coming to our API business, we are focusing on quality business and decreasing low-value commodity operations while building competitiveness for long-term customers. We are seeing promising results from the implementation of Project Pragati, our comprehensive cost improvement and commercial excellence program. This has been our second consecutive year of healthy margin expansion in the API segment. We are positive about this program continuing to yield results well into the coming few quarters. On the demand side, we are seeing customer interest increase in some parts of our portfolio. In quarter three, however, the orders were a little muted as for some of the products which we sell to our regulated market customers, the requirements have been postponed from quarter three to the current quarter four. While our revenue performance during quarter three was muted, we are seeing a marked improvement in gross margin and have a visibility towards a much stronger quarter four. Before I hand over to Saurav, there are three areas I would like to emphasize. The first is growth. Some of our efforts on cost optimization and reshaping of the organization over the last few quarters are now providing us with a very stable, profitable platform to pursue growth opportunities. There are signs that the demand is improving, we are confident of our position to benefit from this recovery. We are excited about the growth prospects in our key markets and will continue to focus on growth. The second important aspect is that of profitability. We are progressing well on our plans to deliver profitability improvement and expect further benefits to accrue with the pickup of demand as well, also the next set of cost optimization initiatives that have been set into motion internally. During this quarter, our EBITDA margins pre-ESOP costs have expanded by 160 basis points quarter-on-quarter to 9.2% and 180 basis points year-on-year. We expect to exit the current financial year at double-digit EBITDA margins. On the M&A front, we believe that this is an exciting time to be in the front-end animal health sector as protein consumption in emerging markets is taking off, along with increasing focus on companion animal care. M&A plays into some of these areas as a key part of our strategy, but it also rests on our API backend capability. One of the most important competitive advantages we see in such a situation will be in the scale of operations. We are seeing new pharma players vying for multiyear upstream opportunities with some API customers. In order to participate more meaningfully in the large and attractive opportunities in the animal healthcare sector and strengthening our position as a truly integrated global animal health platform, we are looking to further augment our R&D and backward integration capabilities on the API side as well. In a way that allows us to move more upstream in the customer value chain. I now hand over to Saurav Bhala, our CFO, for more details on the financial performance. Thank you. Over to you, Saurav. Thank you, Raja. Good afternoon, everyone. It's my pleasure to be here today and share insights into the consolidated financial performance of our company. I will start with Q3 highlights. Our total revenue and EBITDA pre- ESOP cost for the quarter stands at INR 3,294 million and INR 302 million respectively. Formulation business contributed INR 2,510 million to the top line with a growth of 5.3% quarter-on-quarter and 25% YOY in constant currency terms. We have seen continuous growth in our European operations driven by strategic actions focused on portfolio reshaping. Europe clocked a revenue of INR 1,269 million, which is a growth of 6.8% quarter-on-quarter and 13.3% YOY in constant currency terms. India formulation business clocked a revenue of INR 278 million, which is a growth of 1.7% quarter-on-quarter basis. We faced some headwinds in our emerging market operations, which is primarily due to U.S. dollar availability in those markets, which led to some volume loss. Our tender business in Brazil operations also was impacted slightly. Overall, the emerging market has a growth of 4.6% quarter-on-quarter in constant currency terms. The API business revenue for Q3 FY 2024 is INR 690 million against INR 840 million of Q3 FY 2023, which is last year. This is primarily because many of our orders in Q3 current year has shifted to Q4 whereas in last year, quarter three was one of the strongest quarters. It is just a shift in the quarter. Overall, our gross margins have improved by 310 basis points YOY from 42.1% in Q3 FY 2023 to 45.2% in Q3 FY 2024. The improvements here are driven by various focused strategic actions, including the sales mix optimization and a very well-executed price increase across various geographies. Operating cost optimization is one of the key focus areas Raja has already highlighted, and in that, through our focus initiatives for optimizing the cost and as well as enhancing the operational efficiency, we have successfully achieved a notable reduction in our operating expenses of INR 116 million YOY, which was at INR 1,302 million in Q3 FY 2023 to INR 1,186 million in Q3 FY 2024. EBITDA improvements. Mix of above measures have resulted in significant improvement in our EBITDA margins by 180 basis points on YOY basis, which has moved from 7.4% in Q3 FY 2023 to 9.2% in Q3 FY 2024. Moving on to YTD performance highlights. Our total revenue and EBITDA pre- ESOP cost for the quarter stands at INR 10,085 million and INR 658 million respectively. Our formulation business contributed INR 7,520 million and API business contributed INR 2,301 million to the revenue. Overall, EBITDA has improved by 50 basis points from 6% YTD 2023 to 6.5% YTD FY 2024. I would comment on few line items for better clarity of all. In the exceptional item during the quarter, company has accounted for exceptional gain of INR 54 million on account of monetization of various assets in our Germany operations, which is going under a restructuring, and an exceptional loss of about INR 26 million due to a cyber incident which happened at one of our subsidiaries in Sweden. Other income during the company includes a gain of INR 22.98 million on transfer of leasehold rights on our Ambernath land in India. Net monetary loss on hyperinflation economy continues, and the same is on account of hyperinflation related impact as required by Ind AS 29 for our Turkey operations, which is currently a hyperinflation economy. Exchange loss is primarily on account of Turkish lira depreciation against USD. Primarily because of being a hyperinflation economy, the fall is pretty significant. Those were the highlights. I thank you all for your support and I request for the forum to be open now for the Q&A. Thank you. 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 the touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handset while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Divyanshi Davi, an individual investor. Please go ahead. Hi. Thanks for the opportunity. My first question is on the margin side. Your margin seem to have improved sequentially to 9%. What are the contributing factors behind the same, and do you see some improvement? I mean, do you see this improvement to be sustainable? What's the margin improvement on the API or the formulation side? Okay, I'll take that. The margin improvement, as I explained in my opening remark also, is because of combination of factors. Starting from our sales mix optimization, which is focused towards high margin products across geographies, followed by various CIP initiatives which we have initiated in our API operation, which is also leading to the margin improvements that is at gross margin level. Below that, if you see, we also focus on our overall OpEx cost optimization. There is a significant reduction in our OpEx due to those efforts. All this cumulative is making our margin go up, and we believe the current level of margin is sustainable. We have always been guiding and then also mentioned by Raja earlier in the call, we are looking at ending at double-digit margin towards the year-end. Thank you. Just to add over here, the important part to know is that strategically we are improving the quality of our business, whether it's in terms of API or whether it's in formulations. Which really means focusing on high-value customers, high-value products, and those which have a more sustainable roadmap ahead. Opting out of wherever possible, commodity kind of operations which tend to put a lot more variability in the business and do not necessarily always suit our strength. We will see a quality of business improvement as being the primary driver of margin. Apart from, of course, a very intensive competitiveness program in cost as well as operations. Thank you. Okay. Just a follow-up question. What's the overall outlook on the revenue and EBITDA margin side for the next year? The mid-teen margin that was guided on call, would we be able to achieve those? I think what we have indicated earlier, we will pretty much hold to that probably on the margin side. We had indicated that we would exit FY 2024, more in the area of say double-digit margin. I think we are trending to that. As far as the next year is concerned, we had said that as we move towards the next year, we would like to move more towards an outer side of mid-teen, in terms of margins and higher teens as we go forward for two to three years. That's ballpark the direction in which we are proceeding, and our plans are on that line. As far as top line growth is concerned, I think it's going to be a combination of where we are going to, different markets and different businesses. We will see our continuing business, and that's important because we are also discarding some non-profitable or low-margin businesses. I think our continuing business, we should begin to start moving from mid-single digits to early teens before the end of the year. That's sort of the kind of direction which we will go. Okay. Thanks. I will join back in the queue. Thank you. Next question is from the line of Amar from Lucky Investments. Please go ahead. Sir, thanks a lot for the opportunity. Sir, number one, you indicated that now you're talking about API as a backward integration for your formulation business. What I understand here is that currently we don't have any formulation which are basically sourced APIs from our own manufacturing. A, on that. Secondly, when you are guiding for the double-digit margin in the current year exit, this is pre- ESOP or post- ESOP? Thirdly, sir, on an absolute basis, including the discontinued operation, what kind of growth we are targeting for next year? We'll do one question at a time. As far as APIs is concerned, we are not designed for feeding in APIs into our formulation businesses. That's not how we have built the business. The opportunity is there for us as we begin to build the business going ahead. We are seeing that there is some opportunity to both create formulations from our API businesses as well as supply APIs to our existing formulation industry. The business will increase. It's small at this point of time. That is an area of growth for us. It will take some time for that to sort of materialize, but it's an important component now of our strategy. The second part of it, all our margins which we've been talking on EBITDA basis is really we're talking about EBITDA pre- ESOP. There is a non-cash component and ESOP is a part of our structure. Therefore, the guidance that we are giving you is always on EBITDA margins, which are pre- ESOP. We have in the past indicated to you also on how we expect the ESOP costs to move over the next three years. On the last question on absolute growth including and non-including, I think for the immediate period ahead, we think the growth will be more in single digits. With the pipeline that we have, as well as some of the new launches that we have, I think on two to three-year framework, we should be looking at early teens to mid-teens kind of a top-line growth for sure. Okay. Thank you, sir. Thanks a lot. Yes. Thank you. Next question is from the line of Bharat Sheth from Quest Investment Advisors Pvt Ltd. Please go ahead. Hi, sir. Thanks for the opportunity and congratulations to you and your team for successfully turning around the business. My question is into, if we look at, we have discontinued several business unprofitable and going more for formulation and more qualitatively, we have improved, which is a high price and sustainable kind of a business model. In that, are we really through with all this exercise or still there is some exercise that we expect to have some kind of an impact, maybe a one quarter, two quarter on the top line as well as EBITDA side? If you can give some color on that. Thank you for this question. One always hopes that this is the end of it. As we see it, I think the last 18 months, there have been several unexpected developments, more on a macro level. If you look at it, what happened in Europe two years ago and what has happened in markets like Turkey, et cetera. That has impacted both the formulation business where we have a front end and our customers who are there for API post-COVID. I think the period of 2022, 2023 has gone around with most markets and most customers are coming to terms post-COVID as well as the kind of economic challenges which these countries have had. This is true for all industries in all business fields. In that process, therefore, all companies have had to reshape their operations. Those who have a higher exposure to some of these geographies or some of these businesses have had to take more drastic actions. We have therefore had to take some of these changes because these are all sound businesses before many of these unexpected events happened. Therefore, we will have to readjust our business to make sure that we take into account some of these changes. Therefore, I think that given our outlook and given the fact that we have made these specific adjustments and we’ve taken fairly hard calls, I think we should not have any serious exceptional issue in the next two to three years at least as we sort of see. Currently, we’ve also made our business very strong and resilient. That’s why it’s very important to have quality business and quality customers. Because they tend to hang on with you much longer, even when you have disruptions. If you have business or a part of your business which is depending on commodity kind of cycles or rapidly responds to some kind of inflationary pressure impacts, then you tend to get more impacted when something exceptional happens. Therefore, I think we have now structured our business where we have a good portfolio. We have got out of assets which might have been depleting our value in the company. I think we have now a set of strong products and customers who are here in the long term to remain with us. I expect little surprise coming in the next one to two years. We can also, we need some luck also along with it, but we are well prepared for it. Okay. On second side, my understanding that you said in near term, maybe you say two, three quarters will grow in mid-single digit. After two, three years it will be early teen to mid-teen top line. Same thing margin maybe from next year onward early teen to then going to a mid-teen kind of a next three years time frame. Is that fair understanding? No, I think we have been guiding as below and I think it's important that we said that in FY 2024 we will exit at double-digit margins. As we move towards the next one year, we expect to move closer to mid-teen margin and thereafter we expect to go to high-teen margin. Right. Okay. That's the direction as far as margins are concerned. As far as top line is concerned, I've said that we've completed more or less the restructuring. I expect next year to be more in the single-digit top line growth. That's more because the arithmetic impact of what we are discontinuing is still play out a bit some part of next year. Thereafter I expect it to be a mid-teen kind of a growth. Okay, sir. Thank you. May I ask our CFO to understand, what are we doing, I mean, to reduce the finance cost and depreciation will automatically will come down as a percentage to sales once we start growing. On this debt part, how do you like to play, really? Sure. On the debt part, since Raja explained how we have done a lot of restructuring, various assets are getting monetized, which we are utilizing to optimize our debt structure to the best extent possible, and while at the same time investing around business growth. Also debt level is correlated to the kind of business growth we are foresee. That is how it will be correlated going forward as well also. On the depreciation part, I think most of our CapEx has been done, and we are pretty ready with that. Depreciation, I don't see much of increase happening soon. There will be some maintenance CapEx to optimize and do some backward integration. Depreciation should be pretty on the same line or maybe slight increase. Finance cost will keep on coming down or it will remain at this level? That depends on the overall guidance given or the rate movements by RBI, which is also dependent on the global factors. We all are hoping, starting second half of the financial year, we should get some respite. It is kind of dependent on that as well. Okay. My question is, for reduction of the debt, what exactly are we doing? You said that after discontinuing Tarapur plant, are we handing off that asset or we will continue to hold the land parcel the way it is? What exactly other asset that we have which is a non-core and we may bring down the debt apart from bringing it down from generating the profit of the company? No, sure. I think I have explained that but let me repeat that. Wherever we are seeing a non-core asset which can be monetized, we are monetizing those assets and that is being used either to trim down the debt if possible or to fund our operation not to increase the debt at least. Either way the debt level is getting managed. If we don't repay but we don't add on to the debt that itself is a kind of optimization of the debt level. Plus I think also that with the kind of growth that we have seen, both in our margins and therefore in absolute EBITDA and top line, we expect that we will be very, very prudent with any of the ratios which are there and therefore we don't expect that to move up. In fact, over a period of time it will come down. Sir last question on our presentation what we offer API formulation and last piece is analytical services. What exactly that suggest and are we already doing some kind of a services? No. We have a subsidiary which is called Sequent Research Limited. Because it's an independent fully owned subsidiary, it provides testing and analysis services, both in-house to our own business as well as to some other customers outside. It's listed as a separate line item. It is not a strategic area for us. It is an in-house company which supplies services to our own business. Okay. Thank you very much sir and all the best. Hello. Thank you very much. Thank you. Next question is from the line of Sachin Kasera from Svan Investment. Please go ahead. Hi, good afternoon and congrats on improved numbers. Couple of things I just wanted to understand. One is on the CapEx side. What is the type of CapEx plans we are having for this financial year, 2025 in broad estimates that we are having? Do you have any other questions or that's the only question? I have. Actually, I just thought I'll take up one by one. Can you just please put all the questions together- Sure. ... so we can just take them together. Yeah. Secondly also, in terms of the fact that you indicated that now that we are more or less done with the restructuring, every year we'll see both improvement in terms of margins as well as a rate of growth. Does it mean that we should be able to repay some of our debts? Finally, in terms of what are our valuation aspirations in terms of revenue growth and margins, how about the return capital which is the most important parameter to get the health of the business? Right now obviously because of this debt and the restructuring is the negative terrain but what is the aspiration there over a two, three-year period? Maybe I'll just go to the second piece of it which is on margin. I think you've already, margin we have already indicated before we are looking at ending this year in double-digit. We move more towards mid-teens by next year and then the idea is that we should be moving towards high-teens in EBITDA margins in the following years. As far as revenue growth is concerned, we will still have some legacy, I would say financials from in next year. We expect it to be in double-digit there as far as top line is concerned but thereafter this business is clearly set for a mid-teen double-digit growth from the following year. That was not my question. My question was that- Sorry? That was not my question. My question was that yes I understand that you indicated improving margins and improving growth. Does that mean that the free cash flow from operations will go up and we should be able to repay some of the debt or we have a high CapEx plan? Because of which the debt will be- I'll come to the second question. On CapEx, generally, we do not have any out of the ordinary plan. We have our current capacities, which are enough to meet what are immediate requirements, though I have indicated also that the place where we are looking for is in the area of our back-end intermediate capacities, et cetera. There are opportunities. We expect, obviously, an improvement in the cash flow situation available after that. There's no extraordinary CapEx expected. Most of the increasing earnings should help us improve this from a debt side as well into our cash flow. Yeah. Obviously, like Saurav said, as we begin to dispose of some of the assets, those will be utilized a bit for retiring some of the debt we may have if required, and at the same time, also funding any of our existing operations. We don't see any significant CapEx requirement which is coming up. Saurav, you want to add anything? No, I think you have covered everything. On the debt, I think the question, Raja has already explained, but debt again. Our working capital requirement will go up once we increase our business size. Debt will always be a combination of the business growth. We are very conscious of our debt level and there is internal benchmark we have on our debt equity levels. We monitor it very closely and only depending on the business requirement we will fine-tune it. We'll do the best required on that area. Be assured of that. Just to take it little further, if I see a working capital, this cycles close to around 110, 115 days. From the type of growth that you are indicating, the incremental requirement there should not be more than like INR 40, INR 50 crores according to me. Hence this question, because our debt levels are currently fairly high for the EBITDA that we are generating. Hence that is one of the key things investors are looking forward to, that if we can reduce our absolute debt and you could give some indication on that front, either in terms of debt to EBITDA target that you are having or in terms of debt to equity, that would provide us some more comfort on the balance sheet strength and our ability to see through and maybe in case any stress that comes in the economy. Yeah, sure. Awesome. We can take that in a one-on-one chat and we'll be able to give you that. Yes. That would be better. Yeah. My other question was on the return on capital employed or return on equity. Are we having any aspirations on that front apart from the improvement in growth and margins that we have indicated? Sure. That will improve. As we explained all through the 20 last few quarters, the entire thing is to improve our efficiency and EBITDA going up. If the EBITDA starts going up, which we are seeing in last two quarters, and we believe it will further continue, EBITDA going up will automatically drive all the parameters, including ROC, ROE, et cetera. Okay. Just one question in terms of, you have also mentioned about inorganic opportunities. What is the type of opportunities you are pursuing in terms of some indication on size? Say, like small opportunity, they could be little larger ones. How will we fund it considering that our debt levels are fairly high? In that case, we may look in terms of raising some equity or how do we plan to fund that? We are comfortable even gearing up some more or do we have some non-core assets that we can monetize for acquisition? If you could give some insights on that. First on the kind of assets we are looking at, there are only two areas which interest us. One is anything which is the companion animal side, if it's something which we can build on. That's an area we're of course doing organically as well. That's one area which we could be interested in the formulation side. On the API side, we certainly will look for any asset which helps us augment or gives us a real step jump in our R&D capability as well as any backward integration which makes us more competitive. That's really the two core things. We're not really looking for product supplementation only. We are looking primarily to look at where there can be a real step up or which gives us advantage in terms of time to market, et cetera, in terms of either R&D or in terms of cost competitiveness or backward integration on API. In terms of the size, well, I think it's very clear we are not going to leverage ourselves beyond what we are currently at in order to do this. Yeah. That brings us to the third question of whether we raise the funds for this. I think we have strong belief from our principal shareholders as well as other sort of companies who are interested in us as well. We believe that if required, we'll be able to raise any kind of capital which is required for that. Okay, thanks. We're certainly not looking at leveraging ourselves unreasonably to fund any acquisition. Thank you. Yeah. Next question is from the line of VP Rajesh from Banyan Capital Advisors. Please go ahead. Hi. Thanks for the opportunity. I have two questions. One is on your revenue guidance. Will that growth be primarily coming from the current business or you are expecting in that guidance maybe some acquisition that you have been elaborating about? The second question is regarding the gross margin. We have shown a significant improvement year-over-year. When you talk about your EBITDA margin improving, is it going to be a factor of gross margin improvement, or is it purely the operating leverage that will come about from revenue? Thanks. I'll leave the margin question to Saurav. I'll answer the first one, which is on growth. The guidance which we are giving is, most of this growth we are expecting from existing businesses. That's why I'm staggering it between what will happen immediately in the next 6- 12 months and what will come later, because we expect a lot of the work which we have currently done to actually flow into revenue growth towards the end of next year. Therefore, going ahead, that should get us into the kind of growth levels we are indicating, but that will be from it is designed around our current business. It's not designed around any kind of M&A. M&A is not really only for growth. It's also, as I said, it needs to be strategic. It needs to give us R&D capability. It needs to give us backward integration capability. Immediately, we are not sort of jumping into M&A just because we want to add something to top line. The top line growth will come more from existing businesses. On margin, on gross margin and how it flows through, I think Saurav can elaborate. Sure, Raja. Thanks. On the margin, it will be a combination of various factors. Obviously, our gross margin will improve because we are having, as Raja has already explained much in detail about the strategy, the restructuring of our portfolio, various price increases, which we are taking proactively and also reshaping the overall portfolio to improve our margin profile. Second is on the various CIP projects which we are driving, which helps us reduce our RM cost overall. Because of these two factors, our gross margin is improving, and we believe it should continue in the current trend. We see some more improvement coming up in next few quarters. On the operating expense part, we have been very conscious to control the OpEx overall, and if you have compared or seen our financials, it has going down quarter on quarter. Now we have a base reduction in the OpEx, and we want to maintain that. OpEx will also contribute its part. Overall on EBITDA level, it will be a mix of both. There will be increase in gross margin and there will be optimization of OpEx. Both will drive the EBITDA margin up. Understood. Saurav, if I may quickly ask a follow-up. Any guidance around the gross margin? It's from 45% today, where do you think it can go up to in the next two, three years? See, the exact quantification will be different, but we can see 150 basis points increase in next couple of quarters minimum, and then after that, we'll see it will further improve, but the improvement would be consistent in next few quarters. Got it. Thank you so much. All the best. Thank you. Thank you. Next question is from the line of Kaustav Bubna from BMSPL Capital. Please go ahead. Hello. Hi, thank you for taking my question. Can you hear me? Hi, Kaustav. Yeah. Just wanted to understand what your outlook is on the Turkey market, and is there any way we are thinking of protecting our business in this market from the currency volatility? Thank you for asking the question. I think Turkey has been through a lot of challenges, and economically, both, one, because of inflation, and two, because of changing direction of economic policy, which did not help as far as the currency is concerned and the current inflation is concerned. What we're seeing on the economic side is that the government certainly has brought in a completely more conventional approach to managing the economics, and therefore we are seeing higher interest rates. We think a bit more steadying at the rate of devaluation. Inflation is, of course, continuing to be high and that's being managed now with higher interest rates, which is quite the opposite of what was being done two to three years ago. The sense we have over there is that things are a bit more predictable. They're on the higher side, but they're more predictable. Therefore, being that it's a very large market and for us as well as for the industry, therefore, we want to take actions which are going to help us strengthen our position and be there for a longer time in terms of improving our competitiveness. We've done quickly very quick and very aggressive actions in that. We have been fairly aggressive on pricing, which is something which earlier was not part of the way in which most companies did it. We are seeing that benefiting us. It is helping us hold on both to our market share, but at the same time, it is also helping us counter the inflation that we just had there. Because we are a strong company over there, we are in fact somewhat benefiting from it because some of the fringe players in the market are the ones who are actually closing down and moving out so our market share is strengthening. The second, the government took to intervene in terms of improving the demand side. We saw for a couple of years a reduction in cattle population in Turkey as farmers began to opt out of rearing cattle because of inflation. The government has now stepped up and has started importing cattle into the country and to regenerate the availability of farm animals in the country. We hope to see some pickup going up there and that should help our business. The third and most important thing for us as a company is that we have a strong manufacturing footprint in Turkey. We have a good plant over there, and we are setting up using Turkey as an export base for the company. That helps us in two ways. One, One, of course, it helps us in revenue, it helps us in getting good business. At the same time, it also helps us hedge naturally for the foreign exchange risk, which is there. Our exports from Turkey are getting set up. We think that very soon, we will be able to offer a natural currency hedge for import and export based on our operations there, and therefore should be less exposed to issues like devaluation and be able to be stronger compared to other companies over there in the business. Overall, I think we will see still some volatility, and that's more because there'll be a translation of currency issues which may be there for the short term. I think from a fundamental business viability as well as running a business in Turkey, I think the market is now beginning to stabilize. We are very careful in everything that we do. No, thank you so much for this detailed response. Really appreciate it. Best of luck for your future performances and hope you keep this turnaround strong. Thanks. Thanks a lot, sir. Yeah. Thank you. It's okay. There's no other question? Yeah. Ladies and gentlemen, in the interest of time, we will take last few questions. Next question is from the line of Jay Jain from Finnovate Financial Services Pvt Ltd. Please go ahead. Yes. I hope I'm audible. Yes. Thank you. Good afternoon, sir. I have a couple of questions. First, what are your plans on the China front, which was one of the regions that the company was showing interest in post the Carlyle acquisition? Are we focusing on that right now? And the second one is, when are we expecting to do more filings in the U.S. on the formulation side, and is there any timeline on the commercialization of those filings? Thank you. Thanks for the question. Firstly, on the China front, I think a lot has changed. On China, we certainly are initially looking from a API point of view. China is more a competitor for us at this point in time. There are, however, opportunities for us to be able to export certain APIs to China. It still remains, as and when we have an opportunity, we will move into supplying there, but it's not a strategic thing for us because much has changed in the opportunity which is over there in China for us right now. It's not something that we will be the top and we will have it on top of our priorities in the next couple of years. On the second part on the U.S. formulation piece of it, we've completed some of the validation, et cetera, from Germany. We went to pause for it because we closed the plant. We still have that live on our project list. As I said earlier, we are looking at a couple of FDA pre-approved CMOs which we have shortlisted. This is something that we will be clearer in the next couple of quarters once we have finalized our CMO in India. However, our completion of our dossiers, et cetera, is in progress and we will be ready with the necessary tech packs, et cetera, which are ready for validation, I expect in the next quarter itself. Whether we will go all the way into filing formulation, et cetera, will be something that we will deal with in a couple of quarters. It having been delayed, even the market opportunity may be different now. The approach to doing it may be very different after five or six months. We'll probably give you clarity on it only after that. Hello? Thank you. Yeah. We take the last question from the line of Saurabh Patwa from Quest Investment Advisors Pvt Ltd. Please go ahead. Thanks a lot for providing this opportunity, sir. Just two questions. One is, can you help understand on the ESOP cost, how do you see trending it over next two, three years? Second question was, if an investor wants to have a detailed discussion, you guys have started meeting investors apart from the call? I'll answer the second piece of it, and Saurav will take on the one on ESOP. Saurabh, you can always write to us. We meet investors. We regularly do these calls, and as any investor, you can certainly write to us if you have any clarification, either on our results or on any other point of view that you have in the company, and we'll be more than happy to share with you on that. If you want any further interaction, please write to our investor cell and we'll take it up immediately after that. On the ESOP piece, Saurav, maybe you can give a view on the trending. Sure. On the ESOP, generally in all the company, the scheme says generally the cost is front-ended. First few years are very high in terms of ESOP cost, and then it starts going down. Same is the case with us. First few years, which has already passed, was high in terms of ESOP. If you see this quarter itself, Q3 versus last year versus this year, we are almost kind of getting a 40% saving. I think the trend will continue, and next year onward, it would be very normalized cost because most of the front-ended cost has already happened in last few years. You will see a reduction there also. Okay. Yeah. Thank you, everybody. Thank you. Ladies and gentlemen, that was the last question of the day. I now hand the conference over to management for closing comments. Thank you very much for attending this call. I think you would have noticed that we are progressing in the right direction in line with what we have indicated, which is keeping our margins moving upwards steadily. Also building the capabilities which we need for further growth and expansion, both on API as well as on formulation. Using that foundation for delivering growth in the coming two to three years. We look forward to meeting you again next quarter over the results. Thank you very much. With that, we can close the call now. Yeah. Thank you. Thanks for your trust on us. Thank you. On behalf of Sequent Scientific Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.