Please note that this conference is being recorded. I now hand the conference over to Mr. Irfan Rahim from Orient Capital. Thank you, and over to you. Thank you, Mike. Good morning, everyone. Myself Irfan Rahim from Orient Capital. We are an investor relations advisor to the company. I hope that all of you and your family are safe and healthy. On behalf of Granules India, I extend a warm welcome to all participants on Q4 and FY 2022 financial results discussion call. Today on the call, I am joined by Dr. Krishna Prasad Chigurupati, sir, Chairman and Managing Director, Dr. K.V.S. Ram Rao, Joint Managing Director and Chief Executive Officer, Ms. Priyanka Ma'am, Executive Director, GPI, and Mr. Sandip Neogi, sir, Chief Financial Officer. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded yesterday on exchanges and on company's website. Before starting this call, I would like to give a short disclaimer. This call may contain some of the forward-looking statements which are completely based upon our beliefs, opinions, and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. With this, I hand over the call to Dr. Krishna Prasad, sir. Over to you, sir. Thank you. Thank you, Irfan. Ladies and gentlemen, a very good morning to all of you, and thank you very much for joining us today for our Q4 FY 2022 earnings call. I'm happy to inform you that our Q4 performance had improved when compared to the last quarter. Over the last three quarters, for Q2, Q3, and Q4, we had a sequential growth in revenue, absolute gross margin, EBITDA and PAT. This performance came in the face of a challenging year for the industry. During this period, there were headwinds around both the availability and price of raw materials, solvents, catalysts, uncertainties arising out of, Ukraine-Russia conflict, as well as reemergence of COVID cases in China. The global supply chain and the logistics continue to remain under duress. The logistics costs have remained at elevated levels. We also continue to face the pricing challenges in the U.S. market. This has resulted in low EBITDA and gross margins where we had a good revenue mix. Granules have demonstrated great resilience in the face of an adverse external environment facing the industry. We continue to remain agile to the changing business environment and doing our best to fulfill customer commitments and maintain service levels. Compared to Q4 2021, we ended up with a lower gross and EBITDA margins. When the trend which started in the last couple of quarters on the increase in input costs continue, there may be a positive trend in terms of PAP supplies. As one of the biggest manufacturers in China, we'll be starting and stabilizing this production in the next couple of weeks. We strive for continued improvement in our financial performance in the start of the. In the short term, we are working on a long-term strategy for making ourselves sustainable and overcome most of the challenges that we are facing now. Looking back at our journey over the years, we have progressively moved from being an API to a fully integrated player with dominant finished dosage sales. We have had a U.S.-driven growth trajectory built on scale, manufacturing excellence, focused execution and cost leadership. We are also making good inroads into Europe and contribution from regions other than U.S. have been on an upward trend. In fact, between EU and LATAM, we had a growth of 27%-31% in the last one year. While our current business model continues, the time has come for us to take Granules to the next level in the journey. We are going through a major business transformation to move the organization towards excellence in science, technology, and innovation. Our strategy going forward focuses on three elements. The first one is strengthening the core through exploiting the current business. Second, building technology platforms for strengthening of existing businesses and creation of new businesses. The third part is to create a strategic lever through ESG by combining the strengths of science and technology and reimagining manufacturing. Ladies and gentlemen, I'm sure that all of you are aware that Dr. K.V.S. Ram Rao had taken charge as CEO and Joint Managing Director at Granules. Today with him, we are in the process of a transformation with regards to human capital, manufacturing technology, and finally reimagining chemistry. I would like to invite Dr. Ram Rao to briefly explain to you about some of the initiatives we are acting on and creating a blueprint for Granules 2.0. Over to you, Dr. Ram Rao. Thank you, Mr. Chairman, and very good morning to everyone. I am happy to walk you through the strategy of the company going forward. Our strategy aims at creating technology platforms in chemistry, in biotransformation, to bring the innovation engine to full throttle and looks at creating the synergies for existing and new businesses. Our efforts are geared towards reimagining manufacturing through innovative process technology and become an industry leader in segment over long term through partnerships and internal innovations. We are dedicating our efforts towards executing on our strategy through the following. Creating a very strong R&D engine for both API finished formulations and chemical intermediates. Bringing excellence in technical intellectual property and regulatory engines. A very important initiative will be to relook at the commercial engines to propel growth not only in U.S., but also in chosen geographies like Europe and LATAM, where we have already started the needle moving. The B2B businesses will be focused with the value-added APIs. A strong focus on cost management, review and governance. A lot of creation on systems and processes for sustainability. The last one is technology development and partnerships. We are working on an effective organization design which focuses on these growth drivers and continue to build management capabilities both organically and inorganically, and transform ourselves into a learning organization. Some of the important initiatives that we have already started are, the first one is a backward integration. We are leveraging our technology partnerships to achieve backward integration for some of the key raw materials for the chosen products using innovative routes, innovative process technologies, and looking at manufacturing excellence with sustainability as a backdrop. We continue to watch the availability and the price trend for some of these raw materials while working in parallel on our initiatives for backward integration. Portfolio filing and launches. We continue to work on our product pipeline and our portfolio with a new vigor. We are strengthening our R&D capabilities to focus on enhancing both the scale and quality of our pipeline. We have several launches planned in the next 18 months. We'll be focusing on enhancing the quality of our pipeline as we strengthen our R&D capabilities. Our pipeline will be moving from me-too products and other generics to products which focus on innovation, science, technology, and going forward, we'll target more first wave launch products, niche products, and also balance the portfolio with high volume products, which is a strength of Granules. One of the important initiatives that will kick in and already kicked in a part in this quarter are the oncology block. We are currently working with several customers to provide CMO services. In the last financial year, we completed submission by validation batches and technology transfer is in progress for several products. The commercial supplies is from this oncology block are expected as soon as the regulatory approvals we get at different stages in this year. We are evaluating opportunities for offering product process and related services to customers in this area of oncology. The Europe partnership business. The growth for Europe in the upcoming years will be driven majorly by partnership business model as this offers value add to our partners and strengthens Granules' footprint across Europe. Europe business model in terms of partnering with customers has been promising as we have already seen growth. As we enter into new business agreements with some of the strong players in Europe generics with signed contracts, we are in process of signing also some contracts with the country players, which should help us to refocus commercial excellence and geography of Europe, and the same strategy can be extended and will be extended to LATAM. Coming to MUPS block. The block has been commissioned and a couple of products have been validated, and we also received a few approvals to their commercialized products from this block. We are confident of earning revenues in MUPS block from quarter two onwards. With this, I hand over to Sandip for taking us through the detailed financial performance. Thank you, doctor. Let me now take you through the performance for the year. Revenue. The fourth quarter revenue was INR 1,030 crores as compared to INR 799 crores in FY 2021. The full year revenue was INR 3,765 crores as compared to INR 3,237 crores in the previous year, showing a growth of 16.3% over the previous year. With supply constraints in API, we have maximized our profitability by optimization of portfolio. Share of revenue from Europe has gone up from 18%- 21% for the full year. Revenue share for other molecules stood at 19% on a full year basis versus 16% in the previous year in line with our strategy. Short supply of para-aminophenol, PAP, resulted in loss of paracetamol API business. The gross margin loss was at least INR 65 crores in FY 2022. The sales breakup as per business verticals and regions are presented in our investor's presentation, which is available on the website. Gross margin. Our gross margins for Q4 contracted by 8.3% on YOY basis, but improved by 2.3% sequentially when compared with Q3 of FY 2022. For a full year basis, the gross margins contracted by 7% over the previous year. Increase in key raw materials, solvents, and other input materials and unrecovered freight costs have contributed to this contraction. You may like to note that raw material increase was in the range of 60%, whereas solvent was in the range of 40%-70%. Freight was in the range of 70% in terms of hike. While we are able to recover the added cost from our B2B business, the same was not recovered from the B2C business due to fixed nature of the contracts. Unrecovered freight and container costs, unrecovered increase in the material cost across all molecules and U.S. price erosion has resulted in bottom line decline in this year. EBITDA and EBITDA margin. EBITDA for the quarter was INR 193 crores when compared to INR 202 crores in the previous year, same quarter. On a full year basis, EBITDA was INR 722 crores in the previous year. The same was INR 855 crores, thereby contracting 723 basis points in terms of EBITDA percentage on account of reasons explained above. R&D. Our R&D spend for the quarter was INR 33.9 crores when compared to INR 36 crores in the same quarter previous year. On a full year basis, R&D spend was INR 143 crores when compared to INR 100 crores in the previous year. The R&D spend would be maintained, will be monitored very closely throughout the next year, and prioritization would be made as per the strategic priorities across various technologies as alluded earlier by our JMD and CEO. Net debt. Our net debt was INR 697 crores as compared to INR 575 crores a year ago, mainly on the increased inventory and receivables due to our increased sales. Our inventories were maintained at higher levels due to COVID and freight delays, and this was a strategic decision. We are constantly monitoring our working capital and efforts are underway to reduce the same while keeping business interest and customer service level in mind. Cash-to-cash cycle. Our cash to cash cycle was 138 days in the current year compared to 117 days in the previous year. The increase of 21 days was mainly attributed to inventory increase due to reasons stated above, receivable increase due to increased business. We hope that the raw material situation stabilizes soon, and then we could expect our CCC to improve further. Operational cash flow. Operational cash flow for the quarter was INR 75 crores when compared to INR 145 crores in the previous year's same quarter. The full year operational cash flow was INR 332 crores when compared to INR 432 crores. Increased working capital, reduced profit has contributed to the reduction in the operational cash flow. We have started seeing improvement in the operational cash flow and free cash from Q3 onwards. CapEx. CapEx spend during the year was INR 397 crores compared to INR 271 crores in the earlier year, mainly on account of increased spend in the MUPS block and AVP2 block in Vizag. Our CapEx spend will be in the range of INR 600 crores for the next two years. Overall, the year's performance was quite good considering the challenges that we have faced throughout the year. With this, I open the floor for questions. Thank you. 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'll wait for a moment while the question queue assembles. We have the first question from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Sir, firstly, on the raw material side, other than PAP, for the other core molecules, has there been any disruption on the prices or the supply side, or that is pretty smooth? I think, all the raw material supplies other than the PAP are smooth, to the extent where we are able to get the product supplies to the market. PAP continues to be an issue for us and the prices of other raw materials either have gone up or maintained the same as in the previous quarters. Will that have some repercussions on the gross margins in the near term, or will we be able to pass it on in terms of higher finished goods prices? I think while our effort has been, and as mentioned by the CFO, that our B2B business we are able to pass on the prices to certain customers in the last couple of quarters. The increased prices to be passed on to customers in the B2C will happen only, that is in the formulation business in the U.S., is likely to happen only towards the end of the Q1, or it will be in the beginning of the Q1. Understood. Secondly, just would like to understand now that, MUPs and oncology blocks will have how much of, operational costs on an annual basis? That's a work in progress, and we should be able to come out with some kind of answers towards the end of Q2 because we are looking at varied capacities of occupancy of these two blocks as we move forward. A stabilized expenditure for these two is expected only after some time. Okay, because that will be additional expense compared to, let's say, the Q4 operational cost. that is also linked to, in my opinion, the revenue that gets generated from these blocks. Understood. Lastly, where do you think net debt could be at the end of FY 2023? While we'll be continuously trying to maintain it at the same level, but since there will be, if there is an increase in the inventory due to strategic grounds and if we continue to grow the business that we are expecting, there could be a little bit of increase in the debt position. Okay, sir. Thank you. That helps. Thank you. We have the next question from the line of Ranvir Singh from Sunidhi Securities. Please go ahead. Thanks for taking my question. Just one clarity. Within footnote we had mentioned that INR 17.25 crore duty drawback claim has been recognized. Which line item is this appearing? It will be in the line of raw material cost reduction, when it comes to the current year and when it comes to the previous year, it's the gross margin. It is in form of or this is an input? INR 17 crore is in the other operating income line. Okay. Which is affecting the gross margin. Yeah. Okay, fine. Secondly, the CapEx we mentioned for FY 2022 for this year, how much is attributable to mobs block and how much is related to the remaining Vizag block? Current year CapEx will be in the range of INR 220 crores. Remaining INR 180 crore is related to It is relating to all other spend, including the routine CapEx that we spend. Currently, because, how many products we have filed from Vizag, how much approvals we have so far? Priyanka. We currently have 2 approvals from the Mobs block, and we've filed about 6 products so far. These two products would be launched in next quarter? We've already launched these two products at a small scale. Okay. from one of our other modules, we will be scaling up and increasing market share over the next couple of quarters. We earlier also had MUPS product, but from different facilities. This is two products we approved from this new facility, right? You're right. We have a MUPS capability in our U.S. facility and also in our existing Gagillapur site. We have another module that is capable of making these products. Because this is going to be a technology that we focus on, we dedicated a full scale, large scale facility for just MUPS, where we have a much larger capacity that we can take advantage of with more products that we'll be launching from. Okay, fine. We see on the revenue side, formulation business has grown by INR 10 million in Q2. That increment is from North America only or we see across the geographies? I think this improvement is across the regions. Okay, because the similar kind of Europe delta is for North America also, but North America Sorry, just to add to what Dr. Ramarao said, a majority of that does come from North America due to the increased number of launches that we have had over the last year. There has been a significant growth outside of finished dosage coming from Europe and Latin America. Okay. How much products currently we have on shelf in North America? We have a total of about 24 products in the U.S. And That's on the RX side. On the OTC side, we have about 10 products. That's a total of about 34 products in the U.S.. Okay. Fine. Thank you. That's all from my side. All the best. Thank you. Participants who wish to ask a question may press star and one on your touchtone telephone. We now have the next question from the line of Tarang Agrawal from Old Bridge Capital. Please go ahead. Hi, good afternoon. A couple of questions. One, you know, the CFO attributed gross margin compression to price erosion amongst other things. It's been fairly visible over the last year for sure. Now if you look back, were you to attribute this more to, you know, channel filling and consequent destocking of channel or did you see heightened competition in terms of more suppliers coming in for your products? Going forward, for the year to come by, how do you see this evolving on the pricing front? Because I did hear a comment whereby you mentioned that in Q1, at the end of Q1, you should hopefully be able to pass on the cost increases to your B2C customers. Sorry, could you please repeat the first half of your question? Right. If I look back, I mean, price erosion has been a pervasive trend across this FY 2022 as a whole. Just wanted to get a sense in your opinion, was it on account of you know, more channel stocking in FY 2021 and consequent destocking? Was it on account of more supply kicking in and you know, in terms of more competition for your products? How should we see this going forward from Q1 FY 2023 onwards? I would like to look at this price erosion from three perspective, okay? What you are asking is only from the U.S. perspective on the formulation. But when you really look at the price erosion coming to API on account of raw material solvents and all, that is very clear and as stated very clearly by the CFO, that there has been a north of 60% increase in the raw materials and between 40%- 120% of the solvent. That is part one. Part two is mainly on account of the freight, which has been a significant increase in component, almost north of 70%. The third one is on the formulation, and Priyanka, would you like to take that up? On the formulation front, primarily in the U.S., you are right. A lot of our competitors have stocked up on a significant amount of inventory over the last couple of quarters, only because the logistics issues have been increasing. We all estimated that they would decrease, but they've been increasing. Everybody has been overstocking on inventory, and that's why we've seen a significant amount of deflation, which is, from what we hear, the largest in over the past decade. Now going forward, inventory levels, we do see them to be going down a little bit because the prices have reached a point that most companies that do not have the wherewithal cannot handle any more price reductions. We do see a lot of product-level rationalization going forward. With product-level rationalization comes a decrease in inventories, and we will see a change, a small change in the scenario over the next couple of quarters. Now, why we said that the price increases will be visible from Q1, Q2 is because for some of our major molecules, we've already passed them on, like we have stated over the last couple of con calls. The term of our agreements gave the customers a certain time period of protection. Now that we have passed that time frame, we'll start seeing that in our actual invoices. I hope that clears your question. Yes. Just a follow-up on this. I mean, these competitors who've been, you know, stocking inventory owing to freight, are they of Indian origin? Are they of Chinese origin? Because one would presume that their cost structures would be, you know, similar or slightly higher than ours for them to be able to sustain the pricing at current levels. See, everything is very product-specific. I would say it's a mix between all regions. I will say that the strongest players will come out stronger because there could be one or two players that say, "We're gonna slash the prices in half," but how long are they gonna sustain it, right? Like you rightfully said. That's why we've actually seen multiple scenarios where we said, "Fine, take the business." We would be prepared to give up the business, but a month later we got a query saying, "We need this product again." If you look at the market share for some of our largest products, we've grown in terms of market share over the last couple of months, which will be visible over the next couple of months. Okay. Thank you. Thank you. We have the next question from the line of Rashmi Sancheti from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. George mentioned in your initial comments that, you know, PAP manufacturing, the supplies will be starting in China. Of your total raw material requirement, from now on, how much we will be dependent on Indian supplier and how much we will be sourcing it from China? I think, the way to answer this question will be twofold. One is China and one is non-China rather than Indian supplier. The way we see the entire thing that will be coming up, if things go well, should be to the tune of 15%-20% from China, and beyond that will be from suppliers outside China. Suppliers outside China, you mean India as well as, Europe? Yeah. I don't want to be very specific there, but just to say that, you know, this is one part which we are looking at in terms of de-risking the supplies. Having said that, being the largest manufacturer of Paracetamol, we also intend to look at backward integration into PAP and some of the important products like Metformin. We have started a program already in terms of looking at backward integration. Once that happens, I think our dependency on China or other external uncertainties is expected to come down significantly. By what period are we expecting that, you know, we will be completely backward integrated for this molecule as well as Metformin? We are in the process of development of the product. We will let you know as we go forward on our plans of backward integration. Definitely the programs have started with the organization. Okay. Then how do you see your gross margin moving from the current levels? Do you still see? Because you have already mentioned that there is a lot of pressure on the KSM and solvents. Do you see that, you know, it would be improving from here on, whatever we have done in FY 2022, or we think that, you know, it will be at the similar levels in FY 2023? As an organization, Granules was always focused on customer satisfaction and customer delight, and also the quality of the service to the customers. I think that has been our biggest focus so far in terms of supply assurance, and that's how we are able to retain the market share. Looking at the price trends and the freight, the way it is, we don't expect any dramatic improvements in any of these areas, but the organization is reasonably positive in terms of the actions that we have already taken, and probably we should be able to see the positiveness in Q1 or post Q1 in the direction what you are talking about. Okay. In terms of North America sales, you know, from last 2-3 years, we were doing a strong growth, you know, more than 25%. In FY 2022, you know, we have done mostly in the range of 12%. Is it that, you know, the lower growth is because we have seen a huge pricing pressure in our base products? What kind of launches have we done in FY 2022? What is the outlook for FY 2023 in terms of number of launches? What do you think the price erosion would be, you know, for next year? I'll take that question. If you look at the absolute terms, we have grown about 13%-14% over the last year in the U.S. itself, and we will continue to grow. As a percentage, we'll continue to grow much better. Even in terms of absolute numbers, we'll be at a much higher level next year as well. You did answer the question yourself. Because of price erosion, we have had a significant decline versus what we projected for the year. In terms of the number of launches, we did five launches this past year. Like we said earlier, we wanted to launch at a scale that we're comfortable in, only because we want to ensure that the supply security is there. The products that we've launched, we've launched at a soft scale, the full effect of which we'll see this year. In FY23, we have about 12 launches in the year, in the U.S. market, a total value of about 3.6 billion units in terms of addressable value. In terms of growth, you'll see a much higher growth percentage than we have seen this year. Currently the price erosion in the U.S. is in double-digit, should I assume that? Yes. The price erosion in the U.S. is in the double digits. I would say high double digits. This is like I said, this has been the highest amount of deflation in the past 10 years in the U.S., this past year. Okay. What I see is that your total FD sales is also just you know in the range of around 13%-14% growth this year, and your North America sales is also almost around 12%. Whatever sales which we have done higher sales in Europe and LATAM, is it that the contribution in these two markets are majorly coming from the APIs and the PFIs? Yes. As you see, and also in the speech, we have already told that Europe and LATAM will be the future growth geographies over the different products mix of API, PFI, and formulation. The current growth, what you see dominantly comes from PFI, and PFI is a more value-added product, as you know. The commercial excellence engagement that we are doing right now in the organization is focused to make sure that while the formulation sales continue to grow in the U.S. through new launches and also through our focus on the core molecules. The Europe and the LATAM are the two growth geographies for us in terms of API, PFI, and also the finished formulation. Okay. This is my last. Just to add to that, I think it's very important to also note that in addition to the 12 launches in finished dosages that we have this year in the U.S., we're also going to be launching five finished dosages in Europe this year. Okay. My last question again on, you know, PFIs. If you can throw more light, like, you know, how, you know, are we adding new customers in Europe or we are getting repeat orders in Europe? Which are the major dominant molecules, you know, for which, you're able to get higher number of contracts? If you can throw some light on, you know, PFIs and APIs, especially in, Europe and LATAM markets that is going to drive growth in the future. It's a three-pronged approach. The first one is to increase the market share with our existing customers. Second one is to add more new customers into the basket. And the third one is to expand the geography of Europe from where we are to the other parts of the geography. That is on the geography and the customer side. On the product portfolio side, on the PFI, it is not just the existing molecules, but we also started adding the new molecules. And the new approvals are likely to come, and we are launching also some new products, as what Priyanka has just pointed out. It's a combination of all these factors together is what we see as a growth in Europe and Latin. Okay. Thank you so much. Thank you. Participants who wish to ask a question may press star and one on your touchtone telephone. We have the next question from the line of Mohit Mandhana from Fidelity Investments. Please go ahead. Hi. Good morning, everyone. Thanks for taking my question. I have two questions, actually. One short-term and second long-term. In terms of short-term question, you know, is there any guidance we are giving in terms of revenue growth and EBITDA margins for FY 2023? You know, if you can, that would be great. The long-term question is really what sort of contributions are we looking from MUPS block as well as, you know, the new onco/complex API block over the next five years, and what does it mean in terms of our revenue growth trajectory over the next five years and our EBITDA margin trajectory over the next five years? Yeah. On the guidance, I think looking at the kind of uncertainties that we have both on the prices of raw materials, price and others, I don't think we can give a guidance on both revenue and EBITDA directly. Organization can qualitatively say that we are positive in the direction of looking at both revenue and EBITDA in the next coming couple of quarters, and we are working towards making sure that how do we really look positive all along in the next four quarters. I think that is on the first one. On the long term, I think, as Priyanka just pointed out, that MUPS has become one of the specialized manufacturing facility, and an excellence in manufacturing for Granules. We have already got approval for a certain number of products, and we are already getting approval for remaining number of products. Our target, as I also told, that, you know, we will be able to start commercialization of this, and we will be able to become one of the largest suppliers of MUPS capacity across the world on the chosen set of approved molecules, which are going to get launched both in U.S. and Europe. I think that's the journey we have. Since it is five years you have asked, I think our endeavor is to see that, you know, the kind of products and approvals will happen in the next couple of quarters, and we should be seeing the filling of capacity very soon, towards the end of the year. That's our endeavor on the MUPS block. Coming to oncology block, I think, the whole business model, what we are looking at, I think we have very. We have good positive strokes from some of our customers in terms of doing the oncology oral solid formulations. Then we are also working with several other partners, and as soon as we have their regulatory approvals in place, I think we will be able to throw more light on the oncology capacity utilization. This should happen, in my opinion, in the next couple of quarters. All right. Thank you. Thank you. We have the next question from the line of Rahul Veera from Abakkus. Please go ahead. Hi, sir. Just wanted to understand between the revenue impact because of the deflation versus the logistics and foreign impact on the margins. How do you see the trajectory from here on? I understand you don't want to give any guidance for FY 2023, but just wanted to understand whether it's going to be product launches and how will the trajectory shape up over the next four quarters. Shall I take that? I think Sandip can. Yeah. As doctor said that, it will be difficult for us to give any sort of a guidance on the gross margin trajectory, unless and until we come back to normal in terms of supply certainty and also in terms of stabilization of the cost, which is highly dependent on crude and other things. What we can think is that there will be, yes, all the. Our endeavor will be always to maximize top line and bottom line. Obviously, when I talk about top line and bottom line, the gross margin through various portfolio optimization and other things. Beyond that, I don't want to comment further. Just to add to what Sandip has told, there is a program which we have started with a high degree of focus and technology and science orientation. This is on the cost optimization. We are looking at various aspects of cost optimization, and that should be able to give us some positive strokes as we go forward into the last couple of quarters. Along with that, we are also expecting some new product launches to kick in, and these are supposed to be a little high volume new product launches. As we get to the approvals, we see more positivity coming out in both top line and bottom line, and we keep you posted on the progress of these two as we move forward. Sure, sir, now when it comes to MUPS technology, the product launches, two launches that we've done. In terms of broader margin profile, is it better than the company profile, company interim margins? I don't think we want to necessarily comment on specific category-wise gross margin. The overall margin will definitely improve in the next couple of quarters. Okay. Now the confidence on the margin is coming from the new contracts that we signed recently? I think it comes from. Earlier it used to be FOB, and we could not take the price rise at that particular point of time back in December. In the Q3 call, you mentioned, I believe, after that we had done, like, revamped a lot of contracts after that. Rahul, can you repeat the second part of your question please? Yeah. I believe our contracts were earlier used to be FOB, where a lot of cost was incurred from our end, and we could not take the price rise because they were fixed price contracts. I believe we have revamped a lot of contracts. Are we confident the margins are going to improve largely because of this contracts now? I think the margins we said we are positive on that, and it is not just because of only one. It is because of the optimization of the product portfolio across various geography. It is on account of some cost optimization programs that we want to build in, which are supposed to help us to either maintain or try to be a better positive side of the gross margin. The third one we are looking at is the new product launches. All these put together, we'll be able to get to the positivity on that. Although, you know, it's difficult to say, and I am not sure anybody will be able to predict what will be the raw material prices in three months' time down the line or the price rises. Whatever the best that we can do, which is internal controllable, I think we are fully on top of it. Rahul, just to add to what doctor said, our endeavor is always to get the increased prices recovered. That process is always on. We don't want to kind of get into any discussion that how many we have been able to pass on or not, but it's always there. Sure. How many launches we'll be doing from the onco block this year, sir? Oncology block, we're not focusing on finished dosages. That block is primarily for CDMO and CMO businesses. Will we see any launches on the contracts, say, CDMO contracts, like, will be utilizing the blocks this year? From the visibility that we have, at least we should be able to see two launches coming out from oncology block. Sure. This is helpful, sir. Thank you so much. Thank you. Thank you. We have the next question from the line of Ranvir Singh from Sunidhi Securities. Please go ahead. Yeah. Thanks for taking my question again. Just one thing on R&D side, quickly, can you guide what level of expenses we can expect in FY 23? We are looking at an R&D expenditure at least between INR 160 crore to around INR 165 crore is what we are anticipating as a next year R&D expenditure, as compared to INR 143 crore this year. How many new ANDA we are planning to file or launch? Currently we have 25 dossiers that we're working on. Like I mentioned earlier, not this year, but within the next 16-18 months, we're looking to launch about 17 different dossiers in the U.S. and Europe, and Canada, of course. This is 17 finished products you are talking about, right? Finished dosage. Correct, sir. Okay. These 17 will not all be in U.S. Partly that will be in Europe. Yeah. It's a mix between U.S. and Europe and Canada. Okay, fine. On PAP side, I can understand that the challenges, you know, continues, but what we have a strategy and planning for, you know, to get PAP supplies on a, you know, regular basis? As we all know that, while we have developed several PAP alternate suppliers apart from China, and China's biggest supplier is starting and they have just started production and stabilizing it, and in the next couple of quarters, next couple of months, we should be in a position to start assuming that all the things in China are going to be, you know, under control. However, as I clearly mentioned to an earlier question, we are now in the process of going self-reliant through backward integration on PAP, and that work is already going on, and that will help us to become a completely backward integrated, self-sufficient organization over a period of time. When we spoke in our commentary that backward integration is one of strategies, so that is related to PAP only or through other products also we are looking at backward integration? It's related to PAP and all other identified key raw materials in our portfolio. Okay, fine. Although you are not giving guidance, one thing I wanted to understand what actually you know what are challenges for not giving guidance, because I can understand the raw material prices are volatile, but at least on revenue side, whether the run rate we have achieved in this quarter, whether this any part of this revenue is one-off or this is sustainable, at least that kind of indication you can give us. I think we spoke about it. On the guidance. There are three, four factors which lead us to believe that, you know, we, instead of giving the guidance, we work towards a positive quarter. Right now we don't want to pin any numbers on this. However, the management thinking is that we will be positive in all the quarters, coming quarters, on both top and bottom line. I think that's what we would like to put it as our approach for this. Like for PFI side, we see that, you know, certainly we have seen very, you know, a strong growth, and I believe that mostly this is in Latin American regions. Whether we have bagged new contract or new products have been launched, since the number of portfolio has been increased, or number of clients, or it's the similar same clients, you know, giving us higher orders. What is actually driving, or it's a pricing related thing? Yeah. Just to repeat once again that in the geographies where we are growing on the PFI, it is not only the increase in the market share with the existing customers, but it is also acquisition of new customers who are helping us to increase the overall market share in those geographies. Okay. It's the customer base actually has helped us to. Yeah, both. It's a combination of both. We are doing very well with our existing customers. At the same time, we are also increasing our customer base. Your unit realization wise, we have been steady, right? It's a mix of both. Well, while we have increased our customer base, we were also able to pass on our cost increases via price increases to our customers. Oh, understood. Obviously the new customer would be at new pricing as well. Correct. Okay, that's clarified. Thank you, and all the best. Thank you. Thank you. We have the next question from the line of Tushar Bohra from MK Ventures Capital. Please go ahead. Yeah. Yeah, thanks for the opportunity, and it's good to see numbers starting to trend up again. Congratulations to the management for that. Last few quarters and you know, especially with Mr. Rao coming in, there's been a lot of focus on the science and innovation part and you know, strategic thinking going forward. If you could you know, maybe detail it out a little bit more you know, say for example, CNS, which is our second-largest in terms of number of products you know, what kind of strategies we could adopt for specific segments or what new therapies or areas we are looking at. You know, maybe a bit more details if it could be shared to understand better the way forward. I think, Tushar, first of all, we are therapy agnostic. Okay? What we will be looking for is innovative opportunities where we will be able to, A, contribute through innovation in the entire science technology space. B, we will be looking at a first wave of launches of some of those important products. C, it will be fitting into our strategy of a backward integration through all this, what I have spoken as a strategy, so that we will be a player who will start with a chemical intermediate and all the way we will go towards the finished product. I think that is how we approach the new portfolio. While doing that, we are not going to ignore any of our current commercial products. As clearly stated in several questions, we'll be strengthening our current products in such a way that we will be able to become the same, right from chemical intermediate to the finished product supply on all the chosen products, even in the current commercial segment. I think this is a slightly different approach to what we used to do earlier, and this will enable us to actually benefit from three angles. A, supply reliability, where you don't have to depend too much on some of the external elements. B, the sustainability, where you will be able to improve on all other factors. C, you should be able to be cost competitive all the time on all the molecules. I think this has been an approach which we have started and which we are beginning to execute, and we should be able to see its fruits as we move forward. Great, sir. Second, you know, from an overall numbers perspective, you know, and I don't really need guidance, but just to try and understand this, last couple of years, last five, six quarters, to be precise, while we've continued to have challenge, you know, on a gross margin and EBITDA margin, and maybe this could be a new normal or maybe there would be a reversion to mean on raw material and logistics costs, but we've managed to grow our revenues quite smartly. It would be fair to assume that, you know, the increase in margins, both gross and EBITDA going forward, would be accompanied by a reasonably, you know, good growth on revenue overall. I am not saying next one quarter, two quarter, but directionally we should be able to maintain our revenue growth as well as hopefully improve margins, gross and EBITDA? Yes. In the next two to three years? There are two elements in which I would like to explain this. The first element is that we would like to grow in U.S. geography through our pipeline launches that are likely to happen, as Priyanka explained. Those launches, and some of them we believe are high volume products, and therefore the revenue growth will come from the new product launches while protecting and increasing the market share on all our core molecules, both from India-based as well as the U.S.-based molecules. That is our first approach. Our second approach, as already told, we are expanding our geography footprint, especially into Europe and some parts of LATAM, and that is going through, again, new product launches, acquisition of new customers and also increasing the market share of the current customers and current products. When you really look at it directionally, obviously we should be looking at, you know, positive growth in both revenue. We are also not just focused on the top line. Our endeavor is also to really focus on the bottom line, and also we should look at the cash. I think all the three elements will be focused in totality and, directionally, yes, what you are asking is what organization is actually looking at. Got it, sir. Specifically on the you know technology side or in terms of new initiatives, are we also looking at going beyond oral solids? Say, for example, injectables. Are we looking at evaluating it any way? You know, new initiatives in these kinds. Yeah. I got your question. I think currently we would like to strengthen our competitive strength in the oral solids before we can think of going. We are not averse, but I think focus is very important for the organization, and currently, we are focused on oral solids, current portfolio and future portfolio and geography expansion. I think that's how I will look at it right now. Got it, sir. One quickly on CRAMS. You had in the media interaction just before this call mentioned that, there is a, you know, at least a thinking or a, you know, plan around CRAMS. If maybe you could just help us understand in a bit more detail what exactly is the organization thinking and maybe over what horizon we should start to see some execution, efforts around that? Our first effort is on the oncology block. I think that is where we already started looking at CRAMS and contract manufacturing as a combination. It's both development as well as manufacturing in some cases, and it is manufacturing and tech also in some cases. Which we have already started, but we started in a smaller way, and that will be the focus going forward in the next couple of quarters. Then we look at this as a business model going forward. Once our technology strategies kick in, and that's, in my opinion, will be some time away from now to get to the execution phase. I think CRAMS will become an important business element in our journey. Great, sir. Thank you so much. If I may squeeze one last on numbers side, quickly. We see in this quarter your costs, other expenses have gone up meaningfully. Just to understand, you know, whether there's any one-off element here or, why has this gone up substantially. On a related note, how much of cost would be attributable this quarter to, say, MUPS and onco blocks, where I'm assuming there's no revenue contribution as yet? Sandip? Yeah. Tushar, MUPS and onco for this current quarter is not significant at all because the capitalization has happened very, very late in the year. Regarding the increase in the cost, mainly it is freight which is attributed to that. Freight is the- Okay. Yeah. One thing. Tushar, if you see the freight costs have gone up north of 70% to the U.S. port, and you all know that we have a low value, high volume product, and therefore price becomes a very, very important component. That I think is a very significant contributor, and it has been there for the last couple of quarters because of the continuous increase in the freight cost and new contracts being sought by the shipping lines. Got it, sir. Thank you so much, and wish you all the best. Enjoying that meeting. Thank you. Thank you. We will now take the last question from the line of Tarang Agrawal from Old Bridge Capital. Please go ahead. Thank you for the opportunity once again. Just a you know, slightly longer question, and correct me if I'm reading it wrong. I mean, you guys have been in the North America space for quite some time as API suppliers and now as formulators. Yet, the oncology piece that's coming up, you're looking at building a contract manufacturing business out of it instead of building a North America-facing formulation space. Similarly, if I were to you know, look back at the manner in which the commentary was feeding, it did seem like a lot of thrust was going towards you know, building a formulation business because you moved from API to PFIs to formulations. Now the sense that I get at least, and I might be, you know, ahead of myself in reading this, but the sense that I get is there's a lot more focus, while the formulation business grows, for the investments that are done, and incrementally there'll be investments, but there's more thrust in sort of trying to grow, the LATAM and the Europe business, which is again, an API and PFI-driven business. So if you could just, you know, explain. Am I reading it correctly? And if so, you know, why not the continued thrust on formulations? First let me take your oncology question. Okay? Why we are doing the contract manufacturing business because we have a good infrastructural capability, and we have the capacity available, and there is an opportunity. I don't think the management has ever said that we are not focused on oncology formulations and development of oncology formulations, which is already happening. We will be developing the products, but we won't launch the old products of P2 or generic products. We will be definitely looking at launching oncology products in U.S. and other geographies, either by us or through partnership. That's our highest level of focus in terms of wave one launches of oncology products. That's the first one. Okay? The second one is in LatAm, Europe, there's a more focus to de-risk the U.S. business pressure and also to make sure that you increase your growth opportunities from existing portfolio. The commentary of the management has always been that while API is always an important element in our business model, but you will get more value add when you are able to leverage your capabilities of the formulation dossier and your PFI capabilities, so that you have a sense of permanency with the customer as well as a better margin to your product. Therefore, the strategy will be to actually look at higher-end opportunities through regulatory innovation as well as the kind of product leverage that we can get. That is the second part of it. The third part of it is, very importantly, that in the North America business, our focus continues to be on the formulation and increase in the product portfolio through new launches and oncology included in that. I think that answers all the three questions. Yes. Thank you. Thank you. I would now like to hand the conference over to the management for closing comments. Thank you everyone for an interesting line of questions on this call. Thank you everyone very much, and I look forward to an exciting next quarters despite all the challenges that we face. Thank you very much and have a good day. Bye-bye. Thank you. In case of any queries, please write to Irfan.