Ladies and gentlemen, good day and welcome to Caplin Point Laboratories Limited Q2 FY25 earnings conference call hosted by Dolat Capital. 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 Ms. Candice from Dolat Capital. Thank you, and over to you, ma'am. Thank you, Nikita. Good evening, everyone. I, Candice Pereira, on behalf of Dolat Capital, welcome you all to the Q2 FY25 earnings conference 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; Mr. D. Muralidharan, CFO; Dr. Sridhar Ganesan, Managing Director; and Mr. M. Sathya Narayanan, Deputy CFO. I will now hand over the call to the management for their opening remarks. Over to you, sir. Thank you, Candice. Thank you, everyone. Good afternoon, and welcome to our earnings call to discuss the results of Q2 and H1 2025. Please note that a copy of all our disclosures are available on the investor section of our website, as well as on the stock exchanges. 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 the exchanges. Please note that the audio and conference 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 now hand over the floor to our Chairman for his opening remarks. Thank you. Good evening, ladies and gentlemen. Welcome you all to our investor call. You are aware of the results of our H1, and my colleagues will talk on the project operation numbers and also the current business of South and North America. Let me emphasize on some of the new areas that we consider as real value addition for our company's sustainability and scalability. First, let me give you the quote of Malcolm Gladwell. He has popularized the concept of 10,000-hour rule to become an extraordinary company in any field. We are confident that our hope creates the faith to become the force multiplier in the years to come. Now, the new areas of valuation. First one is Onco. You already identified two niche onco products for these studies with the hospital patients, not with the healthy volunteers. Most of the companies of our side go for the healthy volunteer studies, which is not that expensive. At the same time, it's also competitive in the market. The three hospitals that we will complete in the next three to four months' time will be used for our V study with the patient volunteers. This will be accurate and also cheaper, too. We also plan to go for patented products where the patent expires in two to three years from now. The advantage will be that we will be one of the very few companies in the market, too. Number two, peptides. You are aware that some of the peptides are ruling the U.S. and the other regulated markets. Now, we are also developing the peptides which are used for obesity and diabetes. These peptide injectables and tablets are for regulated and ROW markets. Number three, insulin. Recently, our COO visited China, and we are in the process of signing an agreement with a leading Chinese company that not only manufactures the drug substance but also the formulation. This will be imported, and we will manufacture in our Caplin Steriles. Once the BMS is ready, the Chinese company will be our BMS and will supply the substance, drug substance, and we will go for scale-up and exhibit in our current facility. And also, we will conduct most part of our clinical studies using our USFDA-approved CRO and our three hospitals. Number three, biosimilars. There are a few mid-sized companies in China manufacturing and marketing biosimilars in the Chinese market. Now that we also renewed our relationship with our sole partner, Jointown, which is the major distributor for many big and small companies in China. They cater to 18,000 hospitals in China. They also gave us a list of a couple of companies, and our COO met one such company in his recent visit, and we initiated the discussion for a partnership with this biosimilar company. And our sole partner, with whom we renewed the relationship, we are also interested in this type of joint venture opportunities for regulated and ROW markets. The fourth one is NCE-1. Nowadays, the Chinese companies are increasingly becoming stronger in NCE-1 areas, which is nothing but challenging the patent with a change in process. And we also met a couple of people who are interested in these types of things, but we are still in the nascent stage, and the discussions are on. And here, these networking opportunities are mainly due to two factors. A, we have been running our office in China for the last 18 years. B, as I told you before, we reconnected with our sole partner, Jointown, who is the second biggest distributor in this country. The access, actually, to these companies becomes easy for them because they distribute most of these medicines, actually, in the Chinese market. They also told us there are companies who don't know the wherewithal to export their products; hence, they need partners, especially from India. The sixth one is specialty chemicals. Jointown is also interested in identifying one particular specialty chemical, which is of huge volume in China itself. He is also a connector of a private R&D promoter who worked as an R&D head in China for 12 years in a multinational company. Now, he has created his own private R&D in India. He has the exposure of developing this chemical in the past. We are working on a proprietary partnership model for this chemical. The seventh one is the medical devices and the hospital products. We found some niche products, mainly the medical devices, mainly in China and India, and these products can be taken to our warehouse in Brazil, and this can be supplied, actually, to the hospital after we do, actually, some market study about these products and prices and what sells. The eighth one is the intermediates in China that we have Jointown facilities. The same can be manufactured in the form of intermediate, actually, in these Jointown facilities of China, and we will do the API, especially in the factories where we are going to complete in Vaisakh and Kovai, Gangaikondan, and this will be used for our general and oncology injectables for captive consumption. The ninth one is the software development, which we already discussed with you earlier. We already mentioned about this software development. It will not only be used in our own factories. This can also introduce the software. We will also introduce the software in factories where we don't have this option, and we will also outsource some of the products from these types of factories in the form of a counter trade, and Jointown will also help us, actually, to identify these types of factories. Finally, we are also looking for more and more private R&D companies in addition to our own R&D for complex and specialty products. What I conveyed to you are all long-term projects with a horizon of three to five years. We are confident of doing many of them as our cash flow is comfortable. Thank you. Thank you very much. Now that I will pass it over to the COO. Thank you, Chairman. So I will touch upon a little bit on our Latin America, U.S., and our recent entry, which we call as our second entry into China. So obviously, our Latin American business, predominantly the Central American markets, where we've been operating for nearly two decades, continues to drive robust growth and cash flow for us. Now, as we enter into the slightly larger markets, we will need to be converting many of our current doses into CTD format doses, and that's a step that we've been working on, and we're confident in the next six to nine months, the entire process will be completed. What has been driving some of this growth in the existing markets itself would be the introduction of new and more innovative products in markets where we already have established an excellent platform. Some of these would be prefilled syringe products where the existing product is in either an ampule or a vial, introducing a pharmaceutical soft gel in a space where the existing product is either a regular capsule or a tablet. So these are all areas in which we are directly launching our products in the branded generic segment, where the margins are also high, and the viability lives for a longer duration. And the next target for us, obviously, in Latin America is entering into the larger markets of LatAm, specifically Mexico, Chile, and Brazil are the long-term targets that we've taken on as a company. When it comes to Mexico, we are happy to announce that we've filed close to 23 products right now, and it's a combination of many products that are from internal pipeline and also many that we have outsourced from other companies, specifically China. In addition to that, we have also filed our first dossier here in Brazil within a couple of months of passing the ANVISA inspection. We are comfortable that our latest partner in Brazil is the right fit for us because this is a company that is also into injectables. But the complementary are that they are into large volume injectables, whereas we are into small volume, and we know them quite well on a personal level. They are one of the top five, top six companies out of Brazil, so we are positive on this partnership. So the second one I would like to touch upon is our U.S. business. The current B2B business that's been continuing well for us is slowly going to be transformed into more of a B2C. We have already set up partnerships with three of the biggest wholesalers in the U.S. because almost 80%-90% of the volumes are moved from these. The second one is we have licenses of pretty much all the states over there as well. We have already set up our third-party logistics warehouse from where the first product has also been shipped out. Obviously, we need to be a little bit patient here because as we aim to work predominantly outside of the big GPOs and PBMs, there will be some amount of slow progress in the beginning, but once we start establishing direct connections with the hospitals, with the clinicians, pharmacies, etc., we feel that this is going to be very much more sustainable and where pricing can be firm, the forecast can be much more firm, and we are much more in control of our own destiny over there. The B2B business continues to grow well. As we have expanded our capacities through phase two, we will also be approaching our existing and new partners for some more progress in this field as well. We have launched five out of the five approved oncology products in the last quarter, so that has also been helping in driving a little bit of our top and bottom line from Caplin Steriles. Our first ready-to-use injectable bag product will be launched in January. This is a segment where there's much lesser competition compared to regular vials. Our prefilled syringe line from this facility, Caplin Steriles, is also close to being qualified, and we have a lineup of about six or seven products that we'll be doing exhibit batches for in the coming few weeks. There is also a high level of automation that has already been achieved at the plant. Our LIMS, our SAP system, our document management systems have all been electronically managed for a couple of years now, which obviously aids in our good compliance record. But we are now adding to it, augmenting it as much as possible by way of moving towards electronic logbooks and also eventually electronic batch manufacturing and packing records where we can say that we are truly going towards a paperless journey. This will significantly help us in our already good compliance record. Finally, let me very briefly touch upon some of the things that we are aiming towards our second innings in China because Chairman spoke about most of them. We have already tied up with two large and one mid-sized company with regards to entry into biosimilars and biotechnology products for us. We are going to be focusing on insulin and first and second-generation monoclonal antibody products to begin with. In the first stage, we are going to be targeting specifically the markets where we are already present in because the platform has already set over there, and we feel very confident that the uptake would be welcome. But the overall aim for us would be aiming towards the larger markets of Latin America and eventually the U.S. as well as we move from being a generic-only product company to the next level of growth, which is into biologics. So when you combine our entry into the larger markets of LatAm, our own label in the U.S., and our entry into oncology space, and also backward integrated with our own API, many of these are exciting growth segments for us. We will have to be patient, like I said before, over the next, I would say, 18-24 months where it's going to be a stabilization and evolution period for us. But post that, I think the company is really embarking on an exciting phase of growth. Thank you, and I request CFO to throw some light on financials before we open up for questions. Yes. Thank you, Mr. Wyn. And audible? Yes, sir. You're audible. Yes. Yes. Good evening, everyone. I have taken time off to join this business as well. Welcome once again. This is D. Muralidharan. The last business as well is started by saying, "Well begun is half done." Okay. Now that half the year is over, we have been able to sustain the growth momentum. As against 15.1% growth in the Q1 versus Q1 of last year, the Q2 has grown 17.8% with the corresponding previous year. Overall, giving an average 17.1% growth in terms of revenue in the current H1. So we are well-positioned, and then what is sustained is scalable, and I think we will be scaling it up further. So that is as far as the performance is concerned. The performance of 130, we say, regularly has grown by 137% growth, and people normally ask, "What is the contribution to the parent of core business, and what is the contribution of US as it is restarted on Friday?" Everybody has come to the party. The core business has grown by 13%. New entity, which is the Caplin One Labs, which has just commenced production in March 15, has also contributed sizably to the turnover. We have just begun with a well-marked 12% growth, and this year we are hopeful of turning positive. The first year of full year of operations will become back positive with this good news from the Caplin One Labs, and CSL has grown 40% H1 to H1, though albeit on a lower base. All the parameters, whatever we have been talking about, sustaining 55% gross margin, EBITDA 35%, PAC 25%, all of this would be ample enough to say that we have exceeded or sustained the percentages what we explained. The cash accrual where we lay emphasis, our Chairman lays emphasis because that is our strength. We have been able to accumulate INR 180 crores in these past seven months, and of it, INR 50 crores has been spent on the CapEx. INR 56 crores has been spent on the CapEx, and INR 123 crores is the accrual from last year's cash balance to this year's half cash balance. INR 916 crores is what we had in the end of March has come to INR 1,039 crores during September 30th, 2024. All the entities have been making profit and well-fed for sustained and scalable growth, and the expenses are under control. Though the quantum may appear to be on a higher side, but in terms of percentage and the contributions made to each of the businesses, these are investments of future because our R&D expenses have also been going up consistently. As a percentage, we are retaining about 4.5%-5% of the revenue as R&D expenditure on an increased scale of business. So this is it from me, and if there are any questions on the financials, we'll be more than glad to clarify. Thank you, sir. We can open up the floor for questions, please. Thank you very much. We will now begin the question and answer session. Anyone who wish 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 handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tushar from Motilal Oswal Financial Services. Please go ahead. So thanks for the opportunity. So first, broadly on this China association, more so the way the kind of regulations that are coming from the U.S. government side, first of all, have we seen any resistance for the existing association with the Chinese, let's say, suppliers? And subsequently, strategically, as we are increasing this association for other portfolios, do you see this as a risk to supply the products in the regulated market, particularly U.S.? Can I answer to your question, please? Sure. Hello. Yes. Yes. Please speak. There are two ways to look at it. Sometimes, like one of the Western economists who said, "China is a country which you can be rich but not be coupled," he said. Now, what we are planning to do or trying to do is, as I told you before, most of the places we will buy actually the API or active substance or something in the form of actually semi-finished and do the final actually activity in India, which means the product will be exported as an Indian product. And when we buy the product, API or whatever it is from China, we won't go for a company which is not of that standard. Today, we are in a position to actually identify companies A, as I told you before, we have been there for the last 18 years, B, like the company which I told you joined, is considered as the number two distributor of that country. So we are in the right hands. These are people who have a reputation, who are quality-conscious. But I do agree with you. There is some trouble in that mission, which also now sometimes it happens to any country for that matter. But what is important actually is the business model, and then is it technically feasible and economically viable? That's what I feel that is important actually when we're looking at the market share. That is it, but this is more like a political, so from that angle, I guess. That is what's enough to be comparative. We don't want to use any words that are political. Thank you very much. Thank you, sir. Thank you. Lastly, just with Caplin Steriles revenue, if you could give me a mixed answer if it was called out in the opening. Sorry, Tushar, what was the question? Caplin Steriles revenue for the quarter? Yes. Sathya, our CFO, can you please take that? Hi. Good afternoon. The revenues of Caplin Steriles for the September quarter is INR 92.42 crores of operating revenue. Okay. And are we sharing the EBITDA price for this entity? The PAC for this entity for the quarter is INR 12.60 crores. All right. Thank you. Thank you very much. Thank you. Thank you very much. Thank you. The next question is from the line of Aman Soni from Nvest Analytics Advisors LLP. Please go ahead. Hello. Am I audible? Yes. Yes. Good evening, sir. Congrats for a good set of numbers. Like three quarters ago, I asked the same question on delays happening on CapEx plans. So at that time, you mentioned, say, about Oncology API is delayed on account of some addition happened on land acquisition at Gangaikondan. But if I compare the same timeline given at that time with the timelines as of today, there is still that timeline gap is increased by two quarters. Same thing happens in other projects like OSD facility. So my question is, is it due to any regulatory problems that we are facing or any anticipation of poor demand outlook or at execution level only we are facing any lack of capabilities or any other hindrances? So kindly put some color on that, sir. Yeah. Let me take this question. So there is nothing in the form of actually regulatory issues because you see, regulatory issues start only after you complete your USFDA inspection or no approval or any other regulatory market approval. This is actually a new facility where we have already commenced the commercial production of tablets and capsules. We also got orders. We are in the process of exporting it. This year itself, as our CFO said, we'll go for the breakeven, that is for sure. And it's also true it is delayed. But anything that gets delayed, it's not that the opportunity is denied. See, like when we are going for four or five projects at a time, it is bound to happen. I hope you would agree with me. What is important here is not that we don't have any opportunity in the market, but at the same time, the priorities. Sometimes when you have too many priorities, organizing and executing the priority becomes the first priority. You know, the first priority is to complete this Onco project. Now, the tablet capsule, as I told you, is coming to commercial production. Injectables start on it by April or May. Then side by side, we also are working on API Vizag plant. It's likely to come into commercial production by April or May. And then we have already started identifying actually a consultant by name called Tash, who has worked in Gland Pharma. That's a company which we know very well. They worked there for 18-20 years and started this consultancy company. Their exposure to project and operation is really good. They are assisting us, and it's going to go actually on a faster scale. So I would just add, in supplement to that, just a couple of clarification points. Right? While we acknowledge that there is delay in the API project, please note that these API projects are not for APIs to be sold outside. These are for captive use. So when we don't have our own API, it means that we are going to be buying APIs from outside. So the opportunities that we have in Onco or anything else is not actually being denied. It's actually being delayed. In fact, sometimes it works in our favor also this way because in generic space, what happens is what was the market last year will no longer be the market next year. So those times, we actually have some information ahead of time that we can deprioritize those projects when it comes to API. So it's important to understand that what is going to be priority and what's going to be driving growth for the company is being taken care of first, which is our expansion in Caplin Steriles, our expansion into Onco, OSD projects, and stuff. But engineering completion for sure. Understood, sir. I was just asking from the like, "I agree we are using internal funds for these projects." That's fine. But still, the money that is getting served or the delays that are happening, if they are completed on time, that will add value to the shareholders only. That is fine. Secondly, sir, from the U.S. side, someone earlier asked about the resistance from the U.S. So are you witnessing any near-term headwinds on account of this? No. I think when it comes to U.S., if you think from our numbers, we're actually growing quite well. And this is also despite the fact that all of our partners know that we are coming out with our own label in the U.S. And to be honest with you, when it comes to specifically China and any question around that, we do not have too much of an exposure. In fact, we have very little exposure to the U.S. from China, right? Because all of the products, 100% of the products are manufactured in-house. And to my knowledge, less than 20% of the APIs that we use in our products have Chinese source. And all the fast-moving products, we are qualifying a second source, which is not from the same country. So we're doing multiple steps. But honest truth is, have we faced significant headwinds because of the fact that the source of an API is from China? No, to be honest. That's good, sir. And lastly, on your partnership with Chinese companies for biologics and biosimilars, so how does this Caplin Point plan to leverage its existing distribution network in that regard for these products? And are there any specific partnerships or any kind of agreement for distribution in place for Brazil and Mexico also? These products initially will start with ROW market, and then slowly we'll graduate to various markets in Latin America and then move to North America. That will take action. This one, as you know well, these are all for long term. There are two things in the form of actually getting into ROW market. It's more of a short to medium term. For the rest of it, insulin biosimilar and NCE-1 analytics time. But when you start, if you start now, see, it's like actually 10,000-hour rule. We'll have to go by that one. It takes time. At the end of the day, you make it also. That's how you become a force to reckon with. Understood, sir. That's it for my side. Thank you. Thank you. Thank you. The next question is from the line of Rishab Shah from BugleRock Capital. Please go ahead. Your line is unmuted. Please go ahead, sir. As there is no response from the participant line, we will move to the next question. The next question is from the line of Aditya Pal from MSA Capital Partners. Please go ahead. Hello. Thank you so much for the opportunity. Playing on the great set of numbers. Sir, quickly, I want to get a hold on what would be the gross margin of Caplin Steriles, and I didn't get the number of EBITDA. If you can just call that out again for me, that would be super helpful. Okay. Yeah. Yeah. Yeah. Yeah. Hi. Thanks for the question. The gross margin for Caplin Steriles for September quarter is around 37%. And the EBITDA for the quarter is INR 29.27 crores. Is there any particular reason that the gross margin of 37% decreased so much? Is it because that we invested a lot in R&D and new products? Sorry, my apologies, sir. The COGS is 37%, and the gross margin is 63%. Understood. Understood. Understood. That's it from my side. Thank you so much. Thank you. Thank you very much. Thank you. Ladies and gentlemen, to ask a question, please press star and one. The next question is from the line of Ketan Chheda from Retail Investor. Please go ahead. Hi. Thank you for the opportunity. If you could just take a look on the employee expenses. This quarter, it seems it's been higher when I compared the Q2 FY25 numbers with Q2 FY24 numbers. So if you could just explain what is contributing to this 26% increase? Yes. Basically, we have an ESOP scheme where the employees, the serving employees, are rewarded with management, and the grant is set to be the employees are granted the face value, which is only INR 2. And then the ESOP amortization happens on the market price as of the date of the grant. Okay. This itself has consumed more than INR 3 crores, INR 2.8 crores to be precise. That is an additional granted INR 200,000, close to INR 200,000 shares in the current year. So that's the reason. This is a welfare matter or the retention tool or rewarding tool, whatever may you call, which is a major contribution to this. Apart from that, normal increments of the employees, the on-roll employees, the average of 10%-12% is what has contributed to this. Okay. And could you also throw some light on the other operating expenses? Because they also seem to be inching a bit higher as against the growth in the sales numbers. If you could help explain that. Yeah. As I mentioned in the opening remarks also, our R&D expenses have grown. So grown significantly by more than INR 8-9 crores. And then we asked you if you are following our company. Last year, September, we decided that we will move our business to our subsidiaries from standalone to consolidated. The format changed, meaning that these rates are borne by the current company. Because that's where the subsidiaries are bearing, has been borne by INR 13-14 crores is what we have seen. These are the two components. And then as we are upgrading our facilities, depreciation maintenance of buildings, machinery have gone up. And these are basically the reasons. And on the ANDA, we have filed in the current year, this current quarter higher than the last quarter. And also the US entity, which is going to bear fruit in the near future, we have spent close to INR 4 crores. Just that we spent the employee cost, the licenses, all those things as it's accruing to INR 4 crores. These are in general the numbers which accounts for the major increase in expenses. As I said in the beginning, these are investments what we are doing today. Sure. Sure. ESOP, be it R&D, be it U.S., all these are investments. Sure. And if you could just give me a count on the total employee strength from March 2024 versus September 2024, if that is available readily? I'm sorry, I do not have it right now. Probably we can offline if you need that number. Sure. Not a problem. Thank you so much. Those were my questions. Wish you all the best. Thank you. Thank you very much. Thank you. Thank you. Participant who wished to ask question may press star and one. The next question is from the line of Alisha from Envision Capital. Please go ahead. Hi, sir. Good evening. Thank you for the opportunity. Two questions. One, with respect to the U.S. business, like we highlighted that as we are transitioning from B2B to B2C, it is patient. Are we trying to say that this business will probably flatline or witness some kind of contraction in the near term before it goes back on growth trajectory? And second part of the question is, are we still on track to do the $100 million revenue guidance by FY27 for the U.S. business? Yeah. So as we move from B2B to B2C, in fact, it's probably a misnomer to say it moves from B2B to B2C because B2B continues to remain. In fact, with our expansion capacities, we might even add to it. So B2B will definitely be there. Our focus in the near term will not be diluted away from the B2B at all, right? Over a period of time, and there is no X number of years that it might happen in or anything like that. Over a period of time, over a long term, we expect Caplin Steriles to be a B2C company, just like how Caplin Point is, right? So I certainly don't see any flatlining. In fact, 100% of all the revenue that you see in Caplin Steriles today comes from our B2B business. And in the next one to two years, you will probably see that that's still a very high number as we slowly make progress into B2C. Now, when it comes to our B2C, we are also not going toe to toe with the partners that we have because the partners that we have are very large players, very well-established players. And their areas are the GPO sales and the very large wholesale sales and things like that, which are the areas that we are not going to be present in. We are going to be moving away from that and then trying to do direct to hospitals, albeit it might take a little bit longer time to establish, number one. Number two, question on the number, we feel very confident about the pathway that we are taking in the U.S. If it happens in FY27 or FY28, it shouldn't matter too much to us, honestly speaking, because we are comfortable with the speed at which we are going. Sterile product manufacturing is one of the most highly critical areas in pharmaceuticals, and there needs to be a certain amount of stabilization. There needs to be very high levels of compliance, etc. So we don't want to stretch ourselves too thin chasing numbers. So a high-quality business is much more important. A highly sustainable business is much more important than purely on numbers perspective at this point. As we also focus on scaling our B2C business, will the profitability of this business, again, get impacted in near term and then shoot up again, say, a couple of quarters down the line? There will be expenses, right? I think the largest head that we are looking at right now is the salaries. Of course, we do have a five-member team in the U.S. It's not a very large team. In case of, I mean, by way of comparing it to the B2B business, I think on consolidation, you will probably not see much impact at all. But profitability, indeed, will be better than the B2B business once Caplin Steriles label gets established in the U.S. Because remember, today, for all the licensing deals that we are doing, we are sharing 50% of the profit with our partners, right? So technically speaking, that should be accruing to us when we start doing it on our own. Understood. And my second and last question is with respect to our LatAm business, the new initiatives that the chairman highlighted, will that require any incremental CapEx over and above what we've highlighted? Because a lot of it seems like we will be sourcing from China, and like you clarified, we'll be doing probably the finishing at our facilities. And by when can we expect? And because these are slightly more complex opportunities, by when will they start crystallizing for us? I would like to actually answer to your query. Every year, as has been told actually by our CFO, we are in a position of actually retaining a deposit of, say, close to INR 300 crores. Sometimes it's slightly higher. Sometimes it's almost INR 300 crores. So the project that we do is not based on actually a debt-driven opportunity or something. It's more of from internal accruals, and it's true that this project, which we said, not necessarily that we have to go for all these projects actually from the scratch. There are areas you can go for partnership. This partnership model, which of course helps people as long as we understand it's more technically feasible and economically viable, and we need to conduct some market actually studies, which we already informed our people to find out the scope for such and such products, which of course will help us eventually. As far as cash flow is concerned, it is not going to affect our cash flow by getting into these areas, which I will discuss during my speech. That is for sure because we will not be doing all actually at one point of time. We also know it's not that easy to do it also. The priority will be to the one which will strengthen our bottom line and also that will also add to our cash flow. That's how we will look at it. So I. Can you say one more time? Sorry, please. Yes, please. So I know that we are very mindful of cash flows and people prioritize our projects. I just want to know, is this going to be CapEx over and above what we have already highlighted? And also, by when will some of these initiatives start crystallizing for us? Okay. What we will do is the next two years will concentrate on the projects that we are already committed to. Already, we have discussed about it also. These things which we are talking more of actually to be of, say, like asset-like model which we used to have before. Earlier, we started with an asset-like model for generic generics. These are all specialty products which we will do it actually. We may not invest in a big way. If necessary, we may invest in clinical trials or we may invest in actually bio studies, that kind of stuff. And that too, we have a CRO which has been approved by USFDA. We also go for a hospital, free hospital where the healthy volunteers, sorry, hospital volunteers more. That will also reduce our cost by 40% because most of the time when people go for hospital volunteer study or clinical study, that increases the cost when we go for a private hospital. I don't think it's going to cost us in a big way. We are very aware of it, and we'll go step by step. So in the near term, next two years, our focus will be on the larger markets in LatAm and growing our Caplin Steriles business. Yeah. It will be focused on completion of all the projects in the form of vertical integration. Most of the companies, bigger companies are vertically integrated. We will also do that kind of a thing in the form of completion of all the projects, starting from API formulations of various kinds. And then as you rightly said, move to actually bigger geographies for registration. The registration will happen not only from our own products. We will also outsource as long as the company actually is approved by U.S. FDA, EU GMP. It can happen from India. It can happen from China. It can happen from another country also, wherever there is an opportunity. Understood. Great. Thank you, and I'll come back in the queue. Thank you. Thank you very much. Thank you. Ladies and gentlemen, who wished to ask question may press stars and one. The next question is from the line of Rishab Shah from BugleRock Capital. Please go ahead. Yes. Sorry for interrupting. Can you speak a bit louder, please, Rishab? We're not able to hear you. Sorry for interrupting you, sir. Your voice is not clear. Could you speak a little loud? Yeah. So then entering the US market, you would like to cater to smaller players and not competing with the big ones. So what would be the opportunity size and the target market share? Yeah. So obviously, it depends from product to product, right? But if I were to go by a general rule of thumb, you can assume that the three largest buyers in the US, the group purchasing organizations, they call them the GPOs, control about 60%-70% of the market. Having said that, if you looked up whatever is the latest shortage list in the US, close to 70%-80% of the products are injectables only, right? So obviously, the rule of thumb doesn't give you a very clear picture because we feel, and from whatever that we've done research so far, we feel that close to 40%-50% of the market is not well serviced, right? So while we talk about establishing direct contact with hospitals and all of that, the only thing we need to ensure is to make sure that the switch happens, right? It might take a little bit more time because the whole market is very entrenched in the current system that they're operating in. But obviously, pretty much every buyer that we speak to is unhappy with the way the consolidation has happened because they, especially the mid to smaller players, are not getting the right amount of focus. They're not getting the right amount of interest from these larger selling companies. So while it will depend on a product-to-product basis, I would say that there is a meaningful percentage of the market that is outside of these three large companies. I would like to add one more point here. Yes, sir. As you know, when you keep your goods next to the customer in the warehouse, it may take some time actually to get the sales started. Once it started, there is no stopping. If you look at actually the latest concept of a country which is going for friend-shoring and near-shoring, the idea is to keep the goods actually next to the country where there is an opportunity. That clearly shows there are companies which are going for warehousing model. There are also countries going for a kind of warehousing model which is nothing but near-shoring and friend-shoring. So it goes on to say that what is important is keep the goods next to a customer. If the customer is actually a part of the middle or bottom of the family, one way or other actually they are bound to come. What is important is you have to increase the number of products over a period of time. Once we do that, automatically the volume and value will come to the company. Then we create the value actually to the customer. Just to follow up on that one, why is that there are underserved hospitals in USA? Why any of the companies have not catered to them when they know there is no competition in that segment of the market? Please go ahead. Go ahead. Go ahead, sir. Yes. Hello? Can I go ahead? Yeah, yeah. Please, please. The issue is anything that you create in the form of unique has not been created by some other people. That doesn't mean what you have created as unique isn't actually long-term or not. It may not be that successful actually in the sense in the form of non-sharpened medium term. But it's bound to happen because whether the country is actually South America, North America, or any part of the world, the most important thing is the supply chain management. When you keep, as I keep on saying, let me repeat, keep the goods closer to the customer, why the customer will say no. Of course, because of certain things in the form of actually companies monopolizing. There are companies which are more of monopoly and near monopoly. But how long can it continue? If that be the case, other companies too. After years, India is considered the second actually largest destination for catering actually to the generics in the U.S. Now that if you look at it, all the players who are there in the U.S., they are all actually, they are going to U.S. like 20, 22 years ago. We are just like we got registered products got registered in 2016. The U.S. FDA first inspection has been completed there. And now that you know, you have completed 25 ANDAs. More and more will go for more and more the products will come. And then the opportunity also will come to know by getting into the market. In fact, the COO and the other thing also, they are there. Our professionals are there. They have been actually going to the market, understanding the market niche. We are sure that we'll be in a position to make it. That is for sure. We are spending a lot of money and time on this project. Otherwise, we will not be very honest with you. Yeah. Another way also to look at it is if you draw a parallel to what we are doing in Latin America, right? Many people, when they think about Latin America, they look at Brazil and Mexico, right? Because these are two of the largest markets over there. So if you had the wherewithal at the time, we had the type of projects, we had the type of partnerships over there, then like the Americans call the right time for your buck is if you want to get to $100 million in Latin America, you go to these two markets. But we took the road less traveled and went to the smaller markets. While it took a little bit longer for us, what we have right now is much, much more sustainable. It's repeatable, measurable, etc. So that is also something similar to the question you asked. Why aren't many people looking at the smaller to mid-size hospitals and healthcare clinics and stuff like that? Because it takes a little longer to do. Yes. Let me see. One more important factor which I actually forgot to mention. Today, the business in Latin America and the smaller geographies, we are doing very well mainly because of one factor called stickiness factor. When you cater to the bottom of the pyramid, you can't afford actually costly drugs. If you can do a quality medicine at affordable cost, then we are cutting the difference to a raving fan. Now, what I have found in the last two and a half years by staying next to the factory, next to CSL, the same way, if you can reduce actually the deviations in the shop floor and reduce the OS in the QC, this is being handled not by the people at the top. It's more of participatory management. It has to be bottom of top down, and then you'll create a stickiness factor here. The same way, one day we'll create a stickiness factor in the U.S., that will work. Thank you. Thank you, sir. And my last question would be, so you say every time you launch a product, your target is to achieve at least 10%-15% market share in each product category. So you have been successful in that. And there might be some product categories where you have not achieved that market share. Can you please talk louder? Not audible, please. Sir, my question is, you said that every time you launch a product, your target is to achieve at least 10%-15% market share in each product category. So in some products, you might have been successful. And some products, you might not have been successful. So what issues do you face in that? Did you say that we will achieve 10%-15% of the market share anytime? Because I don't remember. It's not easily possible everywhere. We also have 10%-15% of the market share. I don't think any of us would have told you that way. No, I think you're talking about many years ago when what is our target in the U.S.? I think we would have probably said that 10% market share is a decent way to start with. But that was many years ago, Rishab. And honestly, the one other thing you need to take into account is the fact that our entire business in the U.S. today depends on how well our partners do, right? So there are some products where they've occupied more than 10%. There are some that are close to 20%. There are some where they're only 2%-3%. So we're not really in control of how well the partners are doing, right? We can always have conversations with them, etc., but they are going to do what makes best sense for them, which is also one of the driving factors for us to take the bull by the horns and establish our own label over there. When we talk about our own label in the initial periods, we're not going to be aiming at 10%-15% kind of market shares because this will require us to go down the well-traveled route of using GPO sales, etc. So it will be single digits for us for a period of time until it becomes sustainable and really becomes sticky. Then we remain very, very hopeful that we can get into double digits in a very sustainable way after that. Okay. Thank you so much. Thank you. Thank you. Thank you very much. Thank you. The next question is from the line of Dikshan from DB Wealth. Please go ahead. Hello, sir. Hello to you. Congratulations on very good numbers. Sir, I have two questions. First one being on our expansion into the U.S. So as we are discussing that we are now going to go more from the B2C route and approach the hospitals directly, which will aid our margins. Is this the first step we are taking towards the expansion to the B2B2C business? And is this the route that we are taking, which is also considering that we were thinking of maybe in the future going forward with sort of a CVS pharmacy thought process? I'm just giving CVS as an example. But is this the first step towards that thought process, or is this separate and that is separate? I'm not fully clear about the question. Are you saying, are we going to be forward integrating into getting into retail on our own? Is that what the question is? Yes. So a couple of quarters ago, the chairman has been talking about that we've been using our reserves maybe in the future, not immediately, for getting the right place to use our capital, and that may be into the retail business, not certainly immediately, but my assumption is that the first step is to go one step down directly to hospitals. Is that the thought process? Could you please expand on this? Yeah. I'll give you the answer. It's not a couple of quarters ago, probably a couple of years ago. And you're right. We told you that way. And we have found that that exercise has not been very actually fruitful. We've also started 50, 60 pharmacies, to be very honest with you. What we observed is when we went to the bottom of the business pyramid, that's the retail, we found the retailers who used to support us were not in favor of us. They started telling us, "Please don't do this because that will affect our survival." Hence, we now decided not to go ahead with that kind of retail chain expansions. So we want to end such condition in the future. We are more interested in the distribution concept, actually. So if we were to invest into something like that in the U.S. or even Latin America, we'd be much more comfortable in the distribution aspect of it, not so much in retail per se. Okay. So a follow-up to this is the second that then we will be expanding our team size and focusing more on creating a B2B distribution and probably catering to maybe smaller clients so that we can get similar sort of margin profile, but maybe a little bit more employee cost going forward. Is that the thought process? And the employee cost rising is okay because it will cover up in our operating margins in the years to come. So we have a fairly lean structure in the U.S. We have five people on board, and we will see how the business picks up, but eventually, I think we will have to grow the team because our endpoint is where we want the products to be close to the customers. We're going to be eventually setting up three to four warehouses of our own in the U.S. and starting to make inroads. So when that happens, I think definitely the team will grow, but it's early stages. We need to learn how to crawl and walk before we can run. Yes, sir. Yes, sir. All big things start small. Sir, another thing is, Mr. Paarthipan, can you give us a broader idea? And nothing specific is required, but just a broader idea of how we are thinking of our reserves being utilized. We currently have INR 2,500-odd crores. But what is it that you're thinking of our reserves right now? As we told you about the new developments in the form of various forms of actually new business models, new businesses in the form of insulin, biosimilars, getting into specialty chemicals. We may not get into all arms, all the areas, but again, currently, the pyramid approach which we are committed that we will be deploying in our products, it will take two years to complete everything to the end of this maximum. By the time we know, we'll also be mature enough to get into the areas which is very pertinent to our growth, so the results that we talk about can be also useful in the future for buying the ANDAs, but also going for acquiring the distribution company or maybe some other meaningful acquisition, so the money which sits in the thing, okay, I do agree with you, it has to be deployed. But at the same time, it has to be a calculated risk now. So that's why we'll be deploying it. That is for sure. We'll do it actually at the appropriate time. Okay. Okay. Sir, last question is on. It's a bit financial question just for bookkeeping purposes. Is our cash flow cycle, our debtor days from 2020 has increased, and they have not significantly decreased from that point of time? That our inventory days are still around 180 days plus. So is there any significant change that we have seen in the last four years that is here to stay? This is also affecting our ROC in some ways. So just a thought process exercise I want to understand, please. One question, the answer I will give you, then I'll ask my CFO to give you the answer. One is actually as we increase the sales, we are bound to get into some institutional business, which of course, slightly there will be a delay in payment and all that also contributes to this one. But again, if we don't do that also, what will happen actually? People who are actually transporting this type of tenders and the countries where we are operating, those are smaller countries, they will be very selective involved in the tenders. So we have to do. It's not that we are going to actually lose the payment or something. The payment will get fixed. Slight delays also is creating this issue, and rest of it, actually, I'll request my CFO to talk on that. Yeah. Thank you, sir. And let's amplify what Chairman said. If you see the 2020, the benchmark we were taking, there's a period when we brought all of our channel partners, most of them rather, not all of them, four of them or five of them into our own fold, and then we made them subsidiaries. Previously, what was happening was the moment you put, "Leave my factory," it is considered sales, and then it is used to be inventory and transit of the customer. Right? Now that we are doing it in terms of our own subsidiaries, the goods are my own goods. Either my own goods in the standalone books or in the book of the subsidiary. So that is significantly increased. And as we have been repeatedly saying for the nth time, the goods closer to the customer have taken us to this level. Otherwise, we've not been able to reach this level of scaling up in the last four years. If you see, last four years, the turnover has more than doubled, which is fairly more than decent growth for any industry of our type. Right? So out of PN in 2021 growth, which is a shock, 50% is in the warehouses in these four Central American countries. And then 20% is in transit. So transit time is anywhere between 60 and 70 days. And by the time it is available for sales, it's 100 days for the market. So this is in my book. So these are and then the debtors, they take that much time to reach the warehouse. And then on, they have to sell. And then they have to realize the money. So obviously, it will annihilate the working capital fine. As you know, we are not just for working capital. We are not just for funds. We have more than adequate liquid funds. And then this is the strategy which we have adopted, which is paying dividends. I think we should live with that. ROCE, as we have said, that this is not the only reason for dropping ROCE. We have been consistently investing. Last eight years to this year, we have done about INR 420 crores. CSL, where we have done more than INR 400-500 crores, we just started breaking even rather very paltry sum of profits which we started adding to the kitty. And then INR 150 crores, what we have invested in our Caplin One Labs, we'll start yielding results in the next one to two years. So we have to have patience and perseverance. Then we'll see the fruit in the next three years. Got it. Got it. Just directionally, Mr. CFO, the thought process I was referring to is, as we will be expanding our warehouse also in USA, will there be a trajectory where our inventory days, the number is going to go up, or is it going to stay stable? Just how are we looking at it going forward? I understand that we are changing the way that we are distributing our business. I just want to understand if it's going to further affect our cash flow in any extreme manner or even a slight deviation. What is the term applicable to the latter business? I will ask for a predictable. I would like to add a few words here. In any warehouse in the initial stages, it's very difficult to predict whether we'll be able to sell everything, whether it is South America or North America, but going forward, when the business picks up, that will actually help the cash flow. That's how only it has happened in the smaller geographies of Central America. That's Latin America. Although we may have little issues in the U.S., it's better in any business for that matter. Overnight, the generics cannot be sold. It has to create the acceptance. People have to understand that the warehouses are in a position to cater to their requirement because sometimes we also have to understand the market where to create our warehouses, and then even if there is some issue, we'll have to shift actually from that place to another place. The warehouse can be shifted. It cannot be done that way. It's not a retail business where it is tertiary. You can't move from one place to another place. But these issues which you said are part of business. In any business, you'll have a slight increase or no like five days or six days or one week. It's not going to cost the company. We don't have anything in the form of debt overhead. And as you rightly said, we ourselves said, "We have enough cash reserves." So in such a case, I think this is not going to matter much actually in the long run. Got it. Got it. Thank you so much. Thank you so much, team. Thank you so much, Paarthipan, sir. Thank you, sir. Thank you very much. Thank you. As that was the last question, I would now like to hand the conference over to management for closing comments. Thank you very much, everyone, for taking time out to attend our earnings call. We look forward to being in touch with you going forward as well. Thank you very much. Thank you. Thanks to all of you. Thank you very much. Thank you. Thank you. Thank you.