Ladies and gentlemen, good day and welcome to the Caplin Point Laboratories Limited Q1 FY 2025 earnings conference call hosted by Dolat Capital. As a reminder, all the participants' 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 Ms. Rashmi Shetty. Thank you, and over to you. Thank you, Lia. Good evening, everyone. I, Rashmi Shetty, on behalf of Dolat Capital, welcome you all on the Q1 FY 2025 earnings call of Caplin Point Laboratories. I would like to thank the management of Caplin Point for giving us this opportunity to host the call. Today, from the management team, we have with us Mr. C.C. Paarthipan, Chairman, Mr. Vivek Partheeban, Chief Operating Officer, Dr. Sridhar Ganesan, Managing Director, Mr. D. Muralidharan, CFO, and Mr. Sathya Narayanan, Deputy CFO. Over to you, sir. Thank you. Thanks, and welcome to our earnings call to discuss the results of Q1 2025. Please note that a copy of our disclosures is available on the investor section of our website, as well as on the stock exchanges. Also, do note that anything said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement, must be reviewed in conjunction with the risks that the company faces. The conference call is being recorded, and the transcript, along with the audio, will be made available on the company's website as well as exchanges. Also, do note that the audio call is copyright material of Caplin Point and cannot be copied, rebroadcast, or attributed in press or media without specific written consent of the company. I would like to hand over the floor to our chairman for his opening remarks, please. Thank you. Good evening, ladies and gentlemen. Welcome to our investor call. The year 2024 is the 30th year of Caplin Point as a public-listed company, and some of my learnings are as follows. If you are the chairman or COO of the company, you have to reinvent or remake every three months to present your quarterly results. Number two, the manager's job is to ensure cash flow and profits comfortably. Number three, it's all about care and substitute. Number four, you should not forget the fact that you don't own the business. The The business owns you. Now, let me come to some of the specifics. First, a comparison of the annual reports of year-ending 2014 versus year-ending 2023-2024. The top line of 2014 was INR 177 crore, which has increased to INR 1,461 crore now. The PAT was INR 26 crore, which has increased to INR 461 crore. Then the cash results were INR 27 crore, which has increased to INR 969 crore. The market cap was INR 292 crore, which has increased to INR 12,000 crore, and the liquid assets stand at INR 1,850 crore in the last 10 years. It will not be out of place to mention that Caplin is a turnaround story. Most of the turnaround stories, however, the promoters, promoters, actually, promote more of their wealth but reach the excellence and create a profit cash flow to Caplin Point. We are able to build the company from nowhere to now here in the last 10- 15 years successfully. We took the stakes and offered the fairness to our stakeholders. When I say that we took the stakes, I mean that we took the physical risk by traveling to the war zones and created the benchmarking cash flows and profits for our company. Since we could sustain and scale up the cash flow and profits, we are definitely delighted to present our quarterly report. Our unique ideas and business model differentiation has the potential to change Caplin Point to the next target. We also promise you that next 5-10 years, we will create the purple patch to Caplin Point. We had the courage to walk in the dark. Now we'll follow our walk the talk. As you know, today's business is to know 99% about 1% of something that really matters for a phenomenal growth. The rest is survival thread means our downfield journey. What matters here are the few business essentials and focus on these essentials. The business in our Latin American market is a choice coupled with our first-hand experience at the bottom of the pyramid. Today, we live in the world of 1% people creating monopoly goals and monopoly wealth, and it is time for a company like ours to create a value monopoly in areas where the big boys do not have their playground with their playbook. The following quote talks of the uniqueness in the form of only one. "The moon looks upon many night flowers. The night flowers see but one moon." Let me share how Caplin is trying to be a unique architect in the form of building business from the ground up in our Caplin Steriles USFDA facility. Let me also share my last 2.5 to 3 years of exposure of managing Caplin Steriles factories in the form of building from ground up. The basic levels of people in any USFDA facility are the shop floor people and the QC analyst. If one can ensure discipline and skill set in the two areas, the most important issues such as deviations in the shop floor and the overheads in the QC will be totally eliminated over a period of time. Due to my presence in the last few years, I learned actually the four non-negotiables. One is integrity, two is quality, three is safety, and productivity. We also understand the importance of four inevitables for the factory. One is automation, the other one is digitization. The third is machine learning and AI. Of course, the first four non-negotiables and the two inevitables are already there, and we are very keen to ensure actually that all these non-negotiables are regularly implemented from bottom to top. And then we are currently automating and digitizing our USFDA factory, which we will do in all our factories in the future too. 22 years business is managing the manufacturing with the 4 non-negotiables, which is very, very important compared to the marketing in U.S. The reason is there is no marketing for a generic. It is only distribution. Now, let us look at our own front-end presence in U.S.A. and the new features that we are planning to inculcate in our distribution model in U.S. market. We have 24 areas which will be marketed through our own actually front-end in addition to the partners who are doing business currently. The focus will be more on distributing our own products effectively in the future. The new concept would be to source and outsource with our current resource, which is our cash reserves. Source the products from the CMOs of India and other countries. Buy and sell the products from the wholesalers of U.S.A., which is an effective second layer of distribution hierarchy. There are rival companies who do big business without even having their own ANDAs. Their model is to cater not only in U.S. market but also supply the shortage products in U.K., Europe, and other places of regulated markets. We will definitely have an upper edge compared to rival companies as we are building our own pipeline of products, our business of lifetime and the expansions. Recently, we created a warehouse for our Chilean business in the capital of Chile. We have registration to the tune of 72 products. Business from Peru, Costa Rica, and Mexico is improving slowly based on the registrations. Generating more orders for our onco products from the institutions are also guaranteed. And we also started one more warehouse in Guatemala, which we are sure will increase the cash flow and the profits. We also started a brand of generic business, which is increasing in three major countries of Central America, which is Guatemala, El Salvador, and Honduras. Focusing more on registration in Mexico and Chile, which is also actually one of the key areas for our future business. Brazil audit is likely to be slated in the next week, which will also open up more opportunities. Coming to projects, we'll complete Caplin on onco injectables by March 2025. The OSD already started. The remaining three Caplin One facilities, especially the injectable onco API and OSD, are still work in progress. Once we complete all these Caplin One factories, we will enjoy a tax benefit of 8%, which will also help the company to increase the profitability. We finally selected a senior executive by name Mani from Olam International, which is considered a Fortune 500 company. We're here to develop our own software such as logbooks, BMR, and BPR to start with, which is again a unique actually for a company of our size. This will not only be useful for our own factories. We will also use it as a marketing tool with companies in China and Mexico where they need digitalization. We will offer our software and pick up some of the exclusive distribution of some of the unique products for regulated markets of South and North America. Last but not least, the own empowerment in our shop floors of the factories and also as analysts in QC. Caplin is always the wife of the wifeless, such as we cater to the bottom of the pyramid in Latin America. We are building the bottom-up actually architecture in our USFDA facility. Our premium layer is not only from the BOP, also from the middle of the pyramid by offering quality medicines at affordable cost. We understand that catering to the poor is also a strategy if you have the right model of cash flow and profits. It's happening, and it will continue to happen. Thank you. Thank you very much. Thank you very much. Thank you, Chairman. I will just give a little color into the U.S. business before I hand over to our CFO for the finance highlights. We had another good quarter in our growth in the U.S. We were able to beat last year's quarter by almost 70%, and we were able to keep the same split of 75/25 in terms of product revenue and milestone, but albeit at a higher base, which shows that our productivity is indeed going up. We were able to put our expanded capacity to good use with our Line 5 output being higher than Line 1 and 2. We've been able to streamline further the whole manufacturing process, and we are dedicating soon enough injectable lines in line with the way they are sterilized, so this should augment our output even further in the coming years. We're at a high level already in terms of automation when it comes to our quality control and microbiology divisions, where we are nearly 70%-80% paperless. We're in the process of converting our physical logbooks across the site, which are several hundreds in number, to digital logbooks. This is a precursor for conversion of all of our batch manufacturing and packing records also to be converted to electronic formats. This is when we will go as close as possible to a paperless facility, which is something in line with what we've always relied upon, which is our four pillars of non-negotiables which the Chairman mentioned, that is integrity, quality, safety, and productivity. Our new CTO, Mr. Mani, will be spearheading maximum efforts in this. Another important update from our site is the progress that is being made in terms of our front-end in the U.S. We already have five people on board from reliable and trustworthy and successful companies that they've worked at in the past. We've received already 45 out of the 50 states licenses, and we are on track to receive the next five in the coming few months. We plan to come to market with our own Caplin Steriles label by October or November of this year, and we plan to launch around 30+ products within the first 12-15 months. Sticking true to our parent company's success mantras of taking the road less traveled, we are replicating the same in the U.S. by targeting the smaller warehouses and IDNs rather than the big three, where we feel our pricing and consistency would be much better established, even if the growth in top lane is a little bit slower than what some of the larger companies have done in the past. The other mantra for Caplin is also being pro-outsourcing, which we have done in the past from China and we continue to do. This is something that Chairman also touched upon, where we are looking to in-license products from other highly quality-conscious companies, which will further augment our offering to the market. We feel our U.S. presence will eventually be known for our strength in distribution and range with a backend supported by high-quality conscious manufacturing. Thank you, and I request Mr. Murali to throw some color on the finances for this last quarter. We're saying that what is well begun is often. We are pleased to say that we have begun the year well with very good results, with registering 17% growth on revenue, 20% growth on PAT. As we also put current contributors from their contribution of 11% in terms of revenue last year, they have contributed to 16% of revenue in the current year with high margins. That is also reflected in the gross margins going up from 55% to 69.6%. We have been promising 55% achievable margins, gross margin level, but consistently we have been keeping it above 55, 56, whatnot. We hope to continue that. Added to that, this year we'll have one more unit, which is Caplin One Lab, which has just begun commercial production, will be joining the contribution in terms of both revenue and contribution as they are highly value products, niche products, cancer products. They will also contribute to the growth in revenue and contribution this entering quarter, and we hope to end the year as well. Just to touch upon the numbers, it's already there in the presentation of the investors' presentation. Our margins have been very good. As I said, the gross margin is also 59.6%, and the free cash was INR 59 crore, and then the PAT is at INR 125 crore and at 26.2%. We have a very good cash reserves of INR 960 crore as of June. As Caplin put it, we have already lined up projects which are in pipeline. All of them will be funded through our own resources, and we hope to accrue the cash year on a year, and then we need to take on any opportunities that come by our side. So this is it from my side. If there are any specific queries on finance, I will be more than happy to take a word in this regard. Thank you, Mr. Murali. We can open up the floor for questions now, please. 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 touch-tone telephone. 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. First question is from the line of CA Garvit Goyal from Nvest Analytics Advisory LLP. Please go ahead. Hi. Am I audible? Yes. Thank you. Good evening, sir, and congrats for a good set of numbers. I had three questions. One is on the U.S. side. Can you provide some insights into the factors that contributed to decreasing the revenue for Caplin Steriles from INR 100 crore last quarter to INR 80 crore in this quarter? Additionally, can you also share expectations of growth guidance for Caplin Steriles in FY 2025 over FY 2024? That is my first question. I think there might be some confusion there. We've actually increased our revenue from almost 70%. I think you are talking about Yo Y. I'm just talking about Qo Q. Yeah. It's starting with the previous quarter, not the year-on-year. Okay. So I think when it comes to Caplin Steriles, you can imagine that this is still very nascent stages for us. We wouldn't like to compare also on a Q-on-Q basis. And typically what happens is the second half of the year is always larger. If you see in the last couple of years also, that would be something that you would see as a pattern. And sorry, what was the second part of your question, please? Growth guidance for Caplin Steriles, like last time you mentioned INR 300 crore for FY 2024. What is the guidance for FY 2025? Yeah. So we are confident that we will do well this year. We don't want to be very specific on particular set of numbers, but certainly we will beat last year comfortably. That's all we are able to say at this point. I would like to add one more thing here. More than actually the top line, now that we are planning to go for a front-end, as I told in course of my actual speech, we'll not only market our products in the sense we'll distribute our products, we'll also go for outsourcing of other products, which is an asset-like model. In addition to that, there is something which is very unique in the U.S. market. Many companies, especially the trading companies, they buy and sell. They buy the products and sell there. This also will contribute actually to our business. Here, the most important factor is the visibility. Most of the time, our visible metrics have come from the invisible opportunities. So what is important to us with regard to actually U.S. business is, A, the front-end which we have started, B, currently I've been staying here for the last three months, I understood actually about the most important things in the form of actually taking care of integrity and quality in addition to automation and digitization. Who are the persons in the form of architects of the factory, means the shop floor, and the key analysts. Thank you. Understood, sir. My second question is on our standalone business that has been muted this quarter, both in terms of top line and bottom line on Y- on- Y basis. I want to understand the reason behind it. Even if I look at least at the last five years' number, our top line CAGR is merely 3%. I understand we are focused on building a profitable franchise, and we are doing it on consolidated levels in a very better way. But as an investor, we will like to understand from you why a particular segment or a portion of our consolidated business is not on the track of scaling up in the terms of revenue. Okay. I would like to tell you this. See, what is important in any company, this is how I look at it. I hope you would also agree with me. See, A, cash flow, B, actually profits. And every year we are in a position to actually create a cash reserve of INR 300 crore after completing the projects. Company of our size, I would request you to look at the company of our size and see, especially the one who is doing simple generic business, not in the form of no complex injectables or no some technocrats who are capable of creating one product which will create a huge revenue or somebody knows a team which has created the brand marketing in Indian market or something. So we are totally different. We have created a unique business model for generics. With the result, we have been growing. The priority to us is the cash flow and profits. I think it's fairly an honest meeting. I can say that we have been giving you the results, which is fairly convincing to the investors. So I mentioned to that also, Garvit, if you look at us as a company, standalone is certainly not the way to look at us because number one, we have acquired all of our distributors over the last five, six years, right? More than five, six years, I think. And in addition to that, we have Caplin Steriles also, which is a high-growth entity. That's also subsidiary and to us a separate entity. So all of these will be part of the consolidated business only. So standalone by itself, I think, would certainly be the wrong measure to evaluate. And of course, you answered many of the points with your question itself, but I don't think the right barometer is standalone for us to be compared. Lastly, on the effective tax rate, this quarter tax rate is more than 19%. What is the expected tax rate for full year, sir? I request to ask you a quote again. Can you please repeat the question? The tax rate for the tax rate? The effective tax rate, sir. Yeah. This year, as we have been maintaining, it will be hovering around 20%, 20% on a consolidated basis. 20%. I think last year it was 18%, right? That's okay. Yeah. This is how it is. When the units were making losses, we had created separate tax rates because they taxed every kind of thing. Now, whether you want the company to make profit or be at a lower rate, it's a decision we have to make. Got it. Got it. All the best for the future, sir. Thank you very much. Thank you very much. Thank you. The next question will be from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah. Thanks for the opportunity. Sir, on Caplin Steriles, would it be possible to share the gross margin, EBITDA margin? Request CFO or Sathya to take this, please. Hi, this is Sathya Narayanan here. The EBITDA of Caplin Steriles for this quarter ended June 2024 is INR 19.3 crores. INR 19. 3 crores. Just trying to understand you. Gross margin, how much? So the gross margin would be around close to 55%. Sir? Hello? Yeah. So the gross margin, we have both the confluence of export sales and milestones. So for tracking purpose, EBITDA would be a better number because the combination of sales and service income will keep varying. So the gross margin, but to share it, 73% for the quarter, but that would not be a number. Is it the U.S. business which has had a better gross margin both year-over-year and quarter-over-quarter, or is it that U.S. business also we have seen increment in the gross margin? Actually, your line is not very clear. We are not able to hear very well. Sir, just a second. Is this better? Yeah, a little better, please. Please repeat your question. Just trying to understand, this quarter we had much better gross margin both quarter-over-quarter as well as year-over-year. Is it driven by the Caplin Steriles or the lack of Caplin Steriles? Actually, I was just opening remarks. I was mentioning the contribution from the Steriles, which is high value, high-margin product, is increasing in the total CT out of INR 471 crore. As I said, it has contributed about 16%, as against 11% in the last year. That has also contributed to the overall gross margin percentage from 55%-59%. That is the point I was trying to refer to. I was also extending by saying once Caplin One Lab, which is making oncology products, which is a niche segment, the contribution margin is likely to go up. Understood. Understood. So if you could share any progress on the Mexico business both in terms of registration front-end? Yeah. The registration is in progress. And of course, we have to complete. This is a country where the registration takes a long time. And we are very confident we will be able to complete actually at least 20-30 products in the next one year. We will not be in a position to start actually business in a big way. We are getting our business in bits and pieces from Mexico. So a lot of products are being filed, and there are products which are in the pipeline also. And some products are in the Ministry of Health. Hopefully, in one or two years, we will do very well in the bigger geographies of Mexico and say Brazil and Chile. Yes, please. Understood. When did you say the approvals for already registered products? Is it like five years? Is it? Can it? Can you take over? I could not hear the call. Yeah. I think, Prashal, if I'm not wrong, you are asking how long it will take. Is it? Your line is very muffled. We're not able to hear what it is. Yeah. No, sorry, sorry for the disturbance. I'm going to ask the products which are already registered, when tentatively do we see the approval coming through for those products and so subsequently the commercialization? Yeah. That's why I said we will not be in a position to understand the exact date because it is perhaps for the Ministry of Health. That's why I said as and when the registration comes, we start our business. But the warehousing model will not be able to start unless we have 20-30 products at this stage. So it will take one to two weeks, that's why I said. Understood, sir. So tell me on the API facility, which is now expected to get started in second quarter. So how do you think about it? Maybe in terms of captive consumption or external sales, will it require the exhibit batches to be done? So any timeline or any color in terms of how it is going to help either in the sales or in the profitability? Yeah. Now we are going ahead in full steam with regards to our general category API plant at Vizag. Hopefully by end of the year, we should be in a position to start taking trials. I would say that we are probably around 15-18 months away from filing DMFs from the plant. Again, the thing is we need to focus our attentions and priorities on what are important and urgent, right? For us, that is expansion of capacities in Caplin Steriles. That is making sure that our oncocyte continues to break even as quickly as possible. The thing about API is it's really certainly good to have and not a must-have, right? Because we have multiple API sources that we can buy from outside, and our margins are anywhere at a decent level. This will be much more in terms of augmentation of our supply continuity and margins, etc. But if it gets delayed by another couple of quarters, it's not going to affect the company in any way, any shape or form. Understood. Lastly, given the kind of cash the business is generating and the CapEx is already funded through internal approaches, what's the thought process on utilizing the cash which is available on the balance sheet? Yeah. Can I go ahead? Coming to the cash results, see, I was with a company. In fact, the two or three meaningful acquisitions probably this can happen over a period of time are A, a brand marketing company, B, a distribution company which has got a very good network of supplying to actually various institutions or pharmacies which are at the bottom of the pyramid. C, we will also go for some brand if it is actually meaningful. And if everything goes well, there is a possibility of acquiring some ANDA also. So it is better to keep the cash actually as a result to go for more acquisition advantages. All right, sir. Thank you. Thank Thank you. Thank you. Thank you. The next question is from the line of Aman Soni from Nvest Analytics Advisory LLP. Please go ahead. Hello. I'm audible? Yes, please. Just one question. Do you see any kind of headwinds coming in that may prevent us to achieve our target for this year, that what we had earlier anticipated at the beginning of the year, sir? We will continue to achieve what we have been achieving. See, in any business, there are complexities, challenges, logistical issues, as you know well. But when you have your own actually business model in the form of keeping the stocks closer to the customer, the challenges become opportunities. In case there is a rise in strike, what will happen? Many companies, especially smaller companies, they will hesitate to send the consignments because their profit would be reduced actually to minimum. That's the time. We will have opportunities to sell more goods at a higher price also in the market. So like that, every challenge has got an opportunity also. Unless there is such even the worst thing which has happened in the last 100 years is COVID. COVID also improved the sales in pharmaceuticals. So we will not allow the crisis to go waste. That's how we like to take it. Thank you. Thank you very much. Thank you, sir. Thank you. The next question is from the line of Nirvana Laha from Badrinath Holdings. Please go ahead. Hi. Thank you so much for the opportunity. Sir, I want to understand in more detail about your front-end plan for USA. I've tried understanding it from the various calls we've done before. But as I understand, in the USA, there are three or four large wholesalers, pharmacy benefit managers. Even the pharmacy chains are highly organized and very large, like Walgreens and all of those. So if you can explain exactly what we are planning to do there right now, and how does it compare with the larger generic players out of India? What do they do differently, and how are we going to be different? Yeah. Go ahead, Vivek. First, and then I'll add some color block. Yes. Yes, sir. So I think on paper, what you said is absolutely right. I think there are three very large GPOs and wholesalers and stuff, and they control most of the market. But the truth is there is a high amount of non-compliance over there because people are unable to supply product or maintain supply continuity for various reasons, primarily being the prices coming down to an unsustainable level. So if you look at Caplin Point as a company, we've always been taking the road less traveled, and we've always looked at what is hiding from plain sight, right? So we understand that the other side of the market, which is not covered by these very large players, are still significant enough. And given the right kind of value proposition with sustainable pricing and supply, there could be a fairly decent business model to be established. In addition to that, if we also take another leaf out of Caplin Point's book, which is to outsource some products from highly quality-conscious companies, we can really expand our offering from our current number to even twice that number within the next two-three years. We will not be going after very large contracts and everything like that because that will be sort of race to the bottom when it comes to pricing. Finally, what I would say is you cannot really compare this to some of the very large companies because typically what happens is they will always be chasing top line. If you want to be chasing top line, I think you need to go to some of the very large players, irrespective of what kind of margins they offer you, what kind of draconian clauses in the contract that they offer you. So we would be trading the road less traveled here as well with smaller accounts. Okay. I would like to add one more. Products available next to the customer becomes valuable. Recently, most of the time, the customer wants immediate supply. If they place the order actually to the customer who is in India, if he has to export it from India, it takes a long time. That's one of the reasons. If you look at actually all the successful actually communities, starting from Jews to others, they all migrated from one country like two generations, three generations before, and said, "Today, the Jews control, I was told, 33% of the business, 33.5%." Where did they get all these things? They got it only from the market. They know struggles, they face the issues, and then they understood the reality, and they worked with the reality and created what exactly is what they conceive and believe they achieved. See, that's the same way if you look at actually companies which are into U.S. market. There are three types of companies I'm sure you are aware. The small one, most of the time, is a CMO, is a contract manufacturing facility. The big ones, they only look for the creamy layer. They are not very keen actually to focus on the poor. And we are under the impression that change is the only thing which is permanent. Poverty also is permanent in the world. And the only issue, the poor is not actually pro-prosperity. He's pro-poverty. Unfortunately, he remains poor. But if you have a wherewithal to cater to the poor, I'm sure again you can create a creamy layer for your company. So we will not focus on the big boys' domain. We will position ourselves in a place which is ignored by the big boys and which is not actually reachable to the smaller companies. That means for a smaller company, it will become the big entry barrier. For a big company, it's a very small business. That's exactly what we have done in Latin America. Market is a market, whether it is Africa, Latin America, or North America. Sorry, sir. Just to follow up, so with our front-end in USA, are we planning to therefore target certain independent pharmacy chains, or is this geared towards more institutions? No, we will not go for a got it. I will not go for an independent pharmacy chain. We will only cater to the bottom of the business pyramid. See, the pharmacy chains also in U.S., you know where it is monopoly. That doesn't mean actually they control 100%. There are some like in a huge market which is considered as a signature destination. There are at least 10% of the people if you could cater or 1% of the people if you cater. Sorry. 10% maybe individual pharmacies. I don't know how much is the percentage. If you could cater even 0.5% of it, then that will become that will strengthen your bottom line. That's what I'm asking. Sorry, sir. That's what I'm asking. You are planning to target independent pharmacies, right? One, two-unit pharmacies. That's the strategy. That's the people we have to target. Being an injectable company, we have to target the hospitals, home care, clinics, IDNs. I think these are the ones. And now what we will do, maybe today we have 24 products. The way in which we think that we can go for outsourcing, I don't want to mention the name of the company. It's number one company in injectables. They are ready to give their products to us. To him, whether it's a business to multinational or to Caplin Point, it's one and the same because they don't have a friend there. Then the next set of people, many of them are CMOs. There are some CMOs they are ready to give the product. What we have done in China for the ROW market, we can even do it in America. The only thing we'll have to be very careful in selecting our partners. And then coming to quality of the products, we have nothing to worry here because the quality 100% is managed by the USFDA. There won't be any issue that way. The system is actually very, very efficient. If there is any issue, t here are a lot of other issues which takes care of the quality. There's a lot of measures. So I want to make it clear. Business model, which is very important. Yes, please. Sure. Sure. For For your sourcing capabilities, we have seen enough evidence of execution. I was more trying to understand the front-end market like USA. But okay, I will also take this offline with you, sir, if you permit. My second question is on API. So I think Chief Operating Officer, sir, was saying that APIs can wait because, yeah, they are not an immediate need for the business. So what I wanted to understand is when the oncology and OSD APIs, everything comes online, what percentage of our own manufacturing will get backward integrated? If we out of 100, how much will get backward integrated, and what kind of margin uptake can we expect from that? To be honest with you, at this juncture, it's better to focus on Eisenhower Matrix, as you rightly said, urgent and important. So what is going to create more revenue, more cash flow to the company? As I told you before, it's a business model. And we are not a company where it is promoted by technocrats. And when you are from a starting or low starting points, it's not easy to attract the talent, which is actually like the way we see in other cities like Hyderabad or Vizag or even Bangalore or in some parts of Ahmedabad or Mumbai. You know very well, Tamil Nadu, the ecosystem for pharmaceutical has not been externalized. We are trying to create an ecosystem internally. It takes time. So what we will do is the priority. The priority is to focus on major areas. One is today, Latin America, of course, continues to grow. We don't focus so much on Latin America. We want to focus on U.S. because U.S. is the gold standard for actually any company if they can really make it happen in the U.S. The role of API coming to U.S. business is very minimal in terms of profit and cash flow. The role of your business model is much more important than the presence of other areas. Okay, sir. What is the total CapEx amount going towards our API facilities? I would request the COO to answer your question, please. He knows. Yeah. We are targeting probably another INR 20 crore in total for our Vizag facility. For our oncology API, it's probably around INR 60 crore-INR 70 crore at max. To your earlier question, I think if I need to throw some light on it, we'd be a lot more backward integrated when it comes to oncology products compared to general category. Just purely by way of the sheer number of products that we do in general category compared to onco. Also onco APIs are much, much more expensive compared to the general category ones. Got it. You said INR 80 crore incremental. Has anything already been spent? Can you quantify that amount on API facilities? On Vizag, all put together, I think we've already spent close to INR 40 crore, if I'm not wrong. Okay. Okay. So about INR 120 crore total. Sorry. Okay. And last question just from my side. You have so many of your lines coming online now. You have sterile new lines coming online, oncology, OSD, etc. So if I look at the company from a three- to five-year perspective, you have shown a very, very steady growth trajectory of 20%-25% every year. So will that trajectory continue, or will there be a step jump in revenues in the next three to five years at some point? The current actual growth will continue. We are very confident about it. In five years from now, we'll be one of the best companies of India. We are very sure about it because we are spending money. We are not putting money actually on areas which are not of that great importance. We are putting our money on one side, the asset creation. Most of the assets that we create, that we start fructifying. It's more of a vertically integrated model like any other big company. On the other side, we are also creating new revenue streams with asset-like models. We also have plans actually to do some products in the form of insulin and other products directly from countries where they are manufacturing, and they don't have the capabilities to sell in ROW market. We will take it up. We will not focus for biosimilar and other insulin, that kind of stuff. We will not think of actually taking it to U.S. market because it's not easy for us to do that kind of a business. We will sell. We will sell in countries where we are there for the last 20 years, and we have the right connection, and people also trust the quality of our medicine. These are various measures that will contribute to our team over a period of time. Sure, sir. Thank you so much. Your execution has been wonderful to see. And I hope you continue. Thank you. Thank you. Thank you. Thank you very much. Thank you, ladies and gentlemen. Before we take the next question, I would like to remind the participants that you may press star and one to ask a question. The next question is from the line of Adityap al from MSA Capital Partners. Please go ahead. Hello. Am I audible? Yes. Thank you. Thank you so much, sir. Many congratulations to you and the team for this phenomenal quarter. Another question for the company. Just wanted to understand. So when I look at Caplin, ex-Caplin Steriles, sterile revenues over the last two years, that is FY 2022 to 2024, it has been in high single digits. Any particular slowdown you're seeing, or we are just getting ready for a steeper jump by registering products in the larger LATAM region? Single digits, you're talking on the top line, I believe. Am I right? Yes, sir. Yes, sir. I'm sorry to say, top line is actually vanity. Bottom line is vanity, cash is king. That's what they say. So they want us to focus more on the top line. Are you not happy with the bottom line and cash flow? No, no, no. You're doing a phenomenal job. I wanted to get a color because I'm a bit new to the company. So wanted to understand. To be very honest with you, it's not actually that we need to do on all fronts. The reason being, we have to focus on areas where we are capable of at least strengthening the bottom line and cash flow. When we think of top line, to be very honest with you, there is a possibility of selling our generics and creams. That will affect the cash flow. That will also affect actually the profit because profit in the books actually is not the real profit in the bank. So you know very well. So as a result, what happened now, we are trying to build the facilities on one side and the other side focus on actually our own core competence in the form of our Latin American business. Most of the companies, as you know, will know, they consider U.S. is actually the landmark for is the best market in the front of the world. So we are also trying to get into that gold standard business. It will take time because we are little late bloomers in that area. There are companies which went into the market 20 years ago. Our first ANDA came in 2016. Now that we have around 24 ANDAs, we are sure of doing good business in South and North America. That up to two to three years, again, we will also increase our top line. That is for sure. Understood. Question that I have on gross margins. So another phenomenal quarter for you on increasing gross margins as well. But going forward with the addition of our oncology products, do you see the gross margins further expanding? We are very confident. Okay. Go ahead. As we mentioned in respect of CSL, the gross margin today is a combination of two or three streams of revenue on product where there's a COGS and the margin is slightly different. Where there's a pure profit in terms of service income like milestones and the profit share, this is 100% margin. So it depends on the mix. Oncology, I mentioned because they are all niche products and there's a possibility of increasing the gross margin level. That's a mix. So we are looking at a company as a total composite mix. What Caplin One Labs will be able to contribute in terms of the total mix of the day of the company will definitely determine how much of the basis point which the contribution margin will go. As you said, the CSL is a positive point. I mentioned 11%-15% of growth has been contributing. The composition of One Labs has to mature to some level, at least to double-digit level, where it will move up the overall contribution margin because the base being high with still 89%, 80-80+% is coming from the Latin American countries. While on a standalone basis, oncology product will have a very good margin. Steriles will have a very good margin. But how much they contribute to the total kitty is depending on how much the positive movement in the mix is there. Have I answered you? Understood. One more thing. So the two major indicators to us are the free cash result, which is INR 969 crore, and the total liquid assets stands at INR 1,850 crore. And I would request the CFO to tell them what is actually the payable, please. Payable means a region of INR 1,250 crore, which is more than half of the other current assets in the form of statutory receivables and other things. So we will have more than paid for. I only request you to look at actually other companies of our size and see the free cash reserve and the liquid assets also. Probably you'll be in a position to understand other companies. No, no. Definitely, sir. You have a very good quality cash reserve. My last question would be, if we're going to spend incrementally INR 200-odd crore on CapEx, if you can give me the figure, how much would be towards the Caplin Steriles? Yeah. So at this point, what we are planning is we are planning the next round of capital expansion in the injectable side under Caplin Point Lab. There's a multitude of factors as to why we have taken this decision. But there is a phase III of Caplin Steriles that will be actually under Caplin Point Lab, but also catering toward the U.S. We expect this to be around INR 220 crore-INR 230 crore kind of an investment over the next two to three years. Understood. Understood. That's it from my side. Wishing you and the team best of luck. Thank you very much. Thank you very much. Thank you. The next question is from the line of CA Garvit Goyal, which is a follow-up question. From Nvest Analytics Advisory LLP, please go ahead. Hello. Sir, can you please repeat the amount of CapEx for injectable that you just mentioned to the earlier participant? Yeah. Around INR 220 crore-INR 240 crore under Caplin One Labs is what we will be spending, which will be the phase three of our Caplin Steriles unit. phase III of Caplin Steriles only, right? It is for injectable. No, the thing is, again, I don't want to get into the nitty-gritties of it. So this is phase III of our injectable division that is focused towards the U.S. But we will be doing this under Caplin One Labs. And this will happen over the next two to three years. Understood, sir. Thank you very much, sir. Yeah. Thank you. Thank you. The last question for today is from the line of Alisha Mahawla from Envision Capital. Please go ahead. Hi, sir. Good evening. Thank you for the opportunity. A couple of questions. One, can we? Oh, sorry to interrupt you. Alisha, can you speak a little bit more louder? Sure. I hope I'm audible. Yes. Yes. Yes. What are the number of products that are registered in Mexico and Chile? And how many of those are launched? Chile, we have around 72 products, 70-72 products. Mexico, I think Vivek knows the exact number. Yeah. We have around eight to nine products at this point. We have launched a couple of them. Some of these are very tender-oriented products. So we actually, like Chairman said, until we get to about 25-30 products, we don't plan on launching our own warehouse and front-end sales in Mexico until we hit the right kind of portfolio. So probably another 18-24 months is what we're looking at to have day-to-day sales over there in Mexico. Chile, of the 72 products that are registered and approved, how many have we launched? Because we have a warehouse. Yeah. Thank you. We, in fact, started our warehouse recently. One of the Indian guys stationed there. The market actually is 70% government and 30% private market. Currently, we are going to focus on the private market because the volume is lesser, the profitability will be higher. We will also get into the, what do you call it, institutional business over a period of time. We also registered overseas by using our CRO. We completed the BE study. Next year, we are sure to get actually a very good returns from Chile market. Understood. Those sharp increase in other expenses, INR 82 crores in this quarter versus INR 55 crores in Q1 2024, what would be the reason for almost a 50% jump? There are a couple of them contributing there. One, the ANDAs will vary from filing of ANDAs will vary from quarter to quarter. We have filed three ANDAs in the quarter which is over INR 6 crore that is attributing to that. And as we have mentioned, we have been following our company. Last year, in mid-year, we took a call to migrate to CA for our subsidiary for achieving the optimal freight rates and constant availability. So the freight rate is an expenditure in the book of accounts of Caplin as against its COGS for the subsidiary. That is another reason why it has gone up. And we have been taking part in the market promotion expenses that has also contributed to that. And while the sales have grown up by 17%-18%, your forex and other expenses relating to the manufacturing has also gone up. Though not in tandem, they have gone up. These are the basic two, three reasons for increased expenditure. We still believe that. You You should look at EBITDA margin has gone up from 31% to 32%. That's an increase in that means that we have been able to absorb the increased expenses and then still report a higher EBITDA. Yes. Yes. That is correct. Yes. And my last question is, in Caplin Steriles, we have been invested. And I believe that the investment term is till 2025. So any discussions on exit for them or next plans for Caplin Steriles? No, I think there are no active discussions or anything happening. They want us to hit a sizable number in Caplin Steriles, which we are very confident of hitting. But there is no discussion at this point on any event happening there. A couple of years back, we were targeting $100 million sales in Caplin Steriles by FY 2027. Are we still on track to do that? We are very confident that we will be able to achieve it. Okay. Great. All the best and thank you. Thank you very much. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you very much, Dolat Capital, and all of the participants that came together today to hear about our earnings and our story. We look forward to being in touch with you. Thank you very much. Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.