Ladies and gentlemen, good day, welcome to Granules India Limited Q1 FY 2027 earnings conference call. As a reminder, all participant lines will be in listen-only mode, 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. Prachi Ambre from MUFG Investor Relations. Thank you, over to you. Thank you, Atharva. On behalf of Granules India Limited, I extend a very warm welcome to all the participants on the Q1 FY 2027 financial results discussion call. Today on the call, we have Dr. Krishna Prasad Chigurupati, Chairman and Managing Director, Ms. Priyanka Chigurupati, Executive Director, Mr. Mukesh Surana, Chief Financial Officer, Dr. P.V. Srinivas, Chief Technology Officer, Mr. Sanjay Kumar, Chief Strategy Officer. Before we begin the call, I would like to give a short disclaimer. This call contains some of the forward-looking statements, completely based on our expectations, beliefs, and opinions as of today. These statements are not a guarantee of our future performance, involve unforeseen risks and uncertainties. With this, I would like to hand over the call to Krishna Prasad, sir, for his opening remarks. Over to you, sir. Thank you. Thank you, Prachi. Good evening, ladies and gentlemen, thank you very much for joining us today. I appreciate your continued interest in Granules, I trust you have had a chance to go through the presentation we have uploaded. Let me not begin with a number, but with a conviction. Granules today is no longer a company defined by volume and cost alone. It is becoming an innovation-led, complex, differentiated pharmaceutical platform that turns scientific depth into durable, high return, cash-backed earnings. Everything I will share this evening is in service of that one idea. We are moving up the value chain, we are doing it with discipline. Our purpose has not changed: to heal lives responsibly through pioneering green science. What has become clearer is why we win. Few companies can do what we do end to end, make the chemistry, convert it into the formulation, deliver it into the most demanding regulated markets in the world. Do all of that with quality cost discipline. That integration from molecule to the tablet is our real strength. This is not easy to build, it is not easy to copy. Let me give you a few proofs that this is real not just talk. In the U.S., our own manufacturing company, GPI, has moved up to the 27th position among all U.S. generic companies from 74th just five years ago. In the controlled substance space, we are now the fourth largest player, I'm personally most satisfied to see our mission to sustainably supply critical ADHD medicines to patients without shortages playing out well. Complex generics, which were around 39% of our finished dosages a year ago, are now 50%. Our newest engine, the peptide CDMO, built around Senn, grew more than 100% over last year. These are not just slogans. This is our strategy showing up in numbers. The numbers themselves. This is our strongest first quarter ever. Revenue grew 22% over last year to about INR 1,477 crores. Gross margin stayed healthy at around 65.6%. EBITDA grew 37% to INR 339 crores, and profit after tax grew 60% to INR 180 crores. The number I am most pleased with is our return on capital, which has improved to 18%. Our net debt to EBITDA is now almost nothing, 0.07 times. For all practical purposes, we are debt-free, and we generated over INR 387 crores of operating cash this quarter. Let me come to the question I know many of you have, Gagillapur, let me clarify. Our remediation work is essentially complete. We met the FDA in January, we have submitted every response on time. To date, the agency has not raised a single concern on the adequacy of the pace of our corrective actions. seven of our eight facilities now carry a clean EIR. Every site except Gagillapur, including our GPI facility in Virginia, which received its clearance in June. Over the last two years, we have gone through more than 330 customer and regulatory audits without a single critical observation. We cannot tell the FDA when to come, we can be ready every single day, we are ready. Waiting behind that clearance are nine applications ready to launch. That said, we will continue to improve and maintain our quality systems across all sites with the implementation of digitalized systems across the network. Where do we go from here? I want to be honest about the difference between what we have committed to and what we are still exploring. You deserve both. In the near term, the path is clear and is already funded. We bring Gagillapur across the line and unlock the launches waiting there. We scale up our new Genome Valley facility, which adds about 40% to our formulation capacity. We keep taking complex generics higher. They are already half of our finished dosages. We keep growing our radiopharmaceuticals and controlled substance products, our oncology launches from Vizag, and our fast-growing business in Europe and the rest of the world. In the medium term, our growth comes from doing the most difficult things. We are deepening a differentiated portfolio, 505(b)(2) products, first to file, and day-one launches, where being early and being hard to copy both matter. We already have two sole first-to-file products in the public domain, with litigation expected, a few more such opportunities in our pipeline. We are scaling our peptide CDMO across our Swiss and India model, which places us in the fast-growing peptide space. In the long term, we are studying a few larger opportunities. I want to be clear, these are under consideration, not commitments. We are looking at several select non-solid dosage areas to enter, each of which would take the same core strength, our chemistry and our manufacturing, into a much bigger market. There are several exciting opportunities, which when more concrete will be communicated. We'll approach them the way we approach everything, linked to real demand, careful with capital, and only where we genuinely have the right to win. With this, I pass on the mic to Sanjay, who will take you on the progress in the peptide sector. Over to you, Sanjay. Thank you, Chairman, sir. Good afternoon, everyone. Let me briefly update you on the progress of our peptide CDMO platform. Q1 performance was broadly in line with our expectation at CHF 5 million. Revenues improved on a year-on-year basis, while moderating sequentially after a strong quarter four. As seen in previous years, we expect the second half to be stronger than the first and remain confident of delivering meaningful year-on-year growth both in H1 and in H2. During the quarter, we initiated three new customer projects, one in pharmaceutical, two in cosmetic, which have potential to grow over time and over the next few years. We also reengaged with customers on two previously discontinued products, one of which we are optimistic could be reactivated during the current fiscal year as well. On the R&D front, our Zurich and Hyderabad team are now operating as one integrated R&D organization, supporting active customer projects while expanding our technology portfolio. The Hyderabad center is contributing directly to process development and project execution, complementing our Swiss capabilities. Building on our success in TFAP peptides, we have now initiated work on tag-assisted peptide synthesis, where encouraging early laboratory results have the potential to further strengthen our technology platform and support future customer opportunities. We continue to progress on infrastructure upgrades at the Zurich site, with additional solid-phase reactors, large purification columns, and lyophilization capacity expected over the next coming months. In parallel, we have now initiated the next phase of our India manufacturing footprint beyond the R&D infrastructure that we already have, with land now earmarked for our peptide facility at Vizag. As stated earlier, our focus for FY 2027 remains delivering a PAT-positive performance on an annual basis while recognizing the quarter-to-quarter variability inherent in a project-driven CDMO business. With that, I'll now hand over the call to Mukesh, who will take you through the financial performance. Thank you, CMD and Sanjay. Good evening, everyone. I will now walk you through the financial performance Q1 FY 2027. Revenue. Q1 FY 2027 revenue stood at INR 14,768 million, up 22% year-on-year, and broadly stable sequentially over a good Q4. Growth was well-balanced, led by finished dosages, largely contributed by complex generics, supported by North America and Europe, while peptide CDMO continues to scale steadily. This performance indicates broader participation across our business, with the revenue base becoming more diversified and dependable. The sales makeup as per business divisions and geographic regions are presented in our investor presentation, which is available on the website. Gross margins. Gross margin was healthy at 65.6%, an expansion of 74 basis points year-on-year, led by complex generic and higher value formulations enriched our product mix. While the operating environment continues to be influenced by geopolitical tensions in West Asia, leading to inflation in select raw materials, packing inputs, freight, and broadly supply chain costs, our opening inventory levels in the U.S.A. helped to ensure that Q1 FY 2027 gross margins remained largely insulated from these pressures, broadly in line with Q4 FY 2026. We continue to closely monitor the situation and where appropriate, pursuing calibrated pricing actions and cost passthrough mechanism with customers to mitigate the impact of sustained cost inflation for the upcoming quarters. EBITDA and profitability. EBITDA was INR 3,389 million, up 37% year-on-year at a margin of 22.9%, an expansion of around 256 basis points. With our differentiated portfolio scales, profitability is improving steadily alongside it. With focused step-up investments in complex generics, R&D for future growth, QOQ EBITDA has marginally declined by 99 basis points. R&D expenses were INR 880 million, about 6% of sales and up 30% year-on-year. We view R&D as the foundation of our future revenue, focusing on high-barrier areas, CNS, oncology, MUPS, and complex formulations, where we can build a differentiated position. These investments are steadily converting into filings and a healthy launch pipeline, including potential first-to-file opportunities. Q4 FY 2026 R&D expenses were 5.3% of sales. PBT before exceptional items. PBT before exceptional items grew 41% to INR 2,404 million year-on-year basis. This was supported with gross margin expansion. Net debt. Net debt stands at INR 1,012 million in Q1 FY 2027 from INR 4,021 million at FY 2026 close. This healthy balance sheet gives us the comfort to fund our growth, capacities, and R&D. Net working capital to sales improved to 29% in Q1 FY 2027 as compared to 30% in Q1 FY 2026 and Q4 FY 2026. Working capital investments in inventory at these levels are to support our growth while managing receivables well. Cash flow from operations. Operating cash generated from Q1 FY 2027 is INR 3,874 million compared to INR 1,003 million in Q4 FY 2026. Healthy cash generation supported with good profitability and disciplined working capital management. CapEx. CapEx spent on Q1 FY 2027 is INR 890 million compared to INR 1,000 million in Q4 FY 2026. CapEx moderated in Q1 FY 2027 as the Genome Valley investment completed. Investment activities expected to pick up gradually, driven by digitalization and modular growth projects at existing facilities. ROCE. ROCE stood at healthy 18% on a steady upward trajectory compared to 17.6% in Q4 FY 2026. For a capital-intensive business, this is an important measure of how well we are converting our strategy into value. As Genome Valley facility and the peptide platform scale up in the medium term, we expect this to progress steadily. With this, I open the floor for questions. Thank you. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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. The first question is from the line of Nishita Shanklesha from Sapphire Capital. You may go ahead. Yes. Hello, am I audible? Yes, Nishita. You can proceed. I wanted to understand. We've done around 22% YOY growth in Q1 FY 2027, for the last two, three quarters also, we've had the same similar growth trajectory. What sort of growth can we see in FY 2027 on an overall year basis? Nishita, we are quite excited and positive that the growth will continue. Yes, we're confident it will continue. Okay. You mentioned that we've done INR 890 million of CapEx in this quarter. If you could give some sense on the total CapEx for the year, that will be great. Yeah, Nishita, as I clarified, the Q1 is moderated because the major investment Genome Valley is completed. Now the CapEx is expected to pick up with some of the digitalization projects and some growth projects which we have taken up. Rest of the year, we have guided earlier INR 600 crore. We still remain INR 600 crore. INR 89 is already spent. Okay. Understood. Our margins, are they going to stay in the similar range of 22%-23%? Yes, Nishita, we expect that to continue. Okay. Thank you so much. The next question is from the line of Shashank Krishnakumar from Emkay Global. Please go ahead. Hi. Thanks for taking my question. My first one is again on gross margins. I know we are cautioned about RM pressures, but I think partly the mix change in favor of complex generics also seems to have helped. Next one or two quarters, would you expect the favorable mix impact to sort of offset any RM pressures we might see? How should we think about GMs going forward? Yes, you've got it right, Shashank. The RM pressures are quite high with a lot of challenges we are facing. Like you said, the mix is really helping us. A move towards more complex generics is helping us, and we have every reason to believe that it will continue. Got it, sir. The second one on Europe and ROW. I think even excluding Senn, I think the YOY growth has been pretty strong. What is it that is playing out in these markets? Is it API or formulation? Because I think earlier we had also mentioned that API to FDF transition could also play out in Europe and other markets. Just trying to understand what is driving this growth in ex-U.S. market. Priyanka, you want to take that? Sure. This is all planned growth in Europe. Like you said, ex of the CDMO business as well, this is increase in both the API business and the finished dosage business. There is a lot of demand coming in from the products that we've filed in the past in Europe. This is only going to go in an upward trajectory going forward. Got it. Just the last one, if I could squeeze in. Just on Genome Valley, how is it ramping up? Are we on track to sort of get closer to the optimal utilization levels, probably by the end of this year? Also wanted to check if some of the newer filings which you are making, I think you've made five filings this quarter also. Are those being made from this facility? Some color around that. Yeah, the Genome Valley facility is scaling up. By the end of the year, when I say optimal, it's not that we are close to full capacity, but maybe more than 50%, 60%. We need that extra capacity. We just cannot utilize all capacity. If we have to utilize that, we have to start building another plant today. The filings, Priyanka, you would like to answer that question on filings? Sure. We have a lot of product extensions done to GLS to make sure that we have an alternate site to manufacture our existing products from. GGP, while we've mentioned in the past, of course, is going through a warning letter situation, the demand has always been very high, and now we're able to cater to some of that demand through the approvals that we've received in GLS. In terms of new filings, there have been a few filings that we've done from GLS, but the majority are still from GGP, but we've also done some risk mitigation activities by transferring these products to GPI and also GLS facilities. Got it. That's helpful. Thank you and all the best. Thank you. The next question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead. Thank you for the opportunity. Hello, Dr. Krishna. Yes, Sajal. How are you? Yeah. Hi, Doctor. I'm very well, thank you. I was just saying that growing from INR 1 crore annual PAT in 2001 to INR 600 crore is an achievement very few pharma companies can match. Many promoters talk and give interviews and they are available and visible in all sorts of shows and interviews. Very few deliver, actually. Talk is cheap, as they say, and execution is expensive or rather very expensive. I have a couple of questions, if I may. Yes. First is, can you give one example where Granules won business because of capability rather than manufacturing cost? Because our forte before COVID at least was scale economies of scale and cost. Whereas if I read the annual report, the recent one, and even the previous couple of years, we have been pivoting. Is there any evidence that you could help us out with where the capability was the driver for winning the business rather than our low-cost manufacturing? Yes, Sajal. Most of the complex products that we are today reaping the benefit from are difficult to make products. Very, very difficult. Also some of the ADHD products in the U.S., where each product comes with eight strengths and very low dosages, and consistency in manufacturing is very difficult. A lot of people, it's not only because of quotas, they go out of stock because they've had manufacturing issues, and we continue to consistently make and supply these products. The biggest proof is, if I may say so, is the sodium oxybate filing which we did recently, which way is sold first to file. That's a very, very complex product. A lot of people have been trying and are not very successful, and they have also been very confident that they were overcoming the IP barrier. No, that's very heartening to note, Dr. Krishna. Thank you for that. My second question is, peptides CDMO contributes only 4% of revenues today, yet it occupies a central place in your strategy. What operating milestone would tell you and us as the investors and analysts that the platform has become structurally self-sustaining rather than simply strategically promising? Thank you. Sanjay, why don't you take that? Sure. Sajal, our approach towards peptide CDMO is never incremental, but it's a multiplier, and we have stated our goal of five times the revenue in five years. I think the intermediate milestone, if I have to answer your question directly, would be a $50 million revenue. Delivering it with a EBITDA margin which is consistent with such play would be the first proof point, and we see somewhere in the mid of this journey of five years. That's point number one. I missed any other part of the question that you have? No, that's a very hard number, Sanjay. Appreciate that. Yeah. Is it the USD number, what kind of ballpark? Again, see, in CDMO, we can never be specific. The business is lumpy, as we all know, a ballpark kind of a milestone that we can track. Correct. Yes. No, that's very clear. $50 million revenue with 30%+ EBITDA somewhere in the third year from now, mid of third year from now should be our run rate. I think associated with that is some of the customer wins. I count customer wins only if they get into a potential annual size of 10 million+. I think three wins there. I think that should be the proof of the concept. That's a conservative stance. Thank you for answering both questions. I join the queue back. Thank you. The next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Sir, first question on cash flow from operations. If you can explain the significant rise for the quarter, the reason for the same. Tushar, Mukesh this side. I'll try to clarify. One, the sequential revenue growth is not there. That means there is no additional investment in working capital. In fact, we have not only increased little inventory, but actually substantially reduced the receivables with the higher sales in U.S.A. Those receivable days of U.S.A. is lesser. That has helped in improving the working capital. With no increase in working capital and lesser increase in CapEx, overall free cash flow has been better EBITDA. Okay. Free CapEx it is how much? Sorry, Tushar? Oh, my bad. No. CapEx was INR 89 crore. It basically, yeah, I got it. Basically, substantial reduction in receivable days has helped to get higher cash flow from operations. That's right. Is the target of this peptide CDMO revenue, $50 million, in what time frame? Two and a half years? Is that understanding correct? Sorry? The question was targeted towards what's our view in, let's say, a five-year period, I said a validation of that number should come in the middle of that journey. Okay. Lastly, in the opening comments, during upgrading of facility in terms of solid phase reactors and lyophilization capacity capability was mentioned, if you could just help me know the amount, the finance that would be spent for these upgrades. I can give you a nature of the investment. Senn Chemicals has been known as a leading player in the liquid phase peptide synthesis, it has a very small footprint, whereas some of the other capacity like solid phase capacity, purification columns, and lyophilizing capacity. We have actually already ordered, the deliveries of these equipment, some of these missing in the infrastructure bouquet, will happen over the next few months and integration of that, there will be subsequent installation costs attached to that. These are not very high numbers. The components have already been ordered in the past, and the procurement has been done over more than six months now. What we are giving you a picture of that we are now filling up these gaps in the infrastructure with a credible capability along the solid phase synthesis, purification columns, and the lyophilization capacity. Oh, okay. While not disclosing the amount, probably given the capacity-wise, could you highlight what kind of scale are we sort of putting up for the solid phase or lyophilization? Yeah. We cannot go into each equipment capacity, but it's sufficient to say that it addresses the customer's demand that we have been facing in the past. Got it. Just lastly from my side, there's one comment with respect to certain product extensions done through GLS probably to offset the warning letter impact on Gagillapur facility. Just to understand, while the warning letter is there, the existing business continues to be on track, or we have reduced certain production itself from the Gagillapur facility till we get the clearance from the U.S. FDA. The product extension which we are referring to, were these products already approved, but just as a matter of caution, we have shifted to GLS? That's both my two questions. Yeah, you're right. Take his question. Okay, go ahead. We mentioned this multiple times since day one of the warning letter, of the 483s to be precise. We've only taken an intentional stop for a couple of days. Post that, we never stopped production in our site till date. Demand has always been there, supply has always been there. The only thing that stopped was approval of new products, which we hope will resume immediately after the FDA visits us, and we're very positive about a positive outcome. With respect to your question on GLS, it's a combination of both products. Products where we wanted to mitigate risk and moved them to that site, also some new filings. More importantly, filings also from different regions, so we can get all the regulatory agencies to come and audit the site and have them regulatory-ready. Got it. Thanks a lot. The next question comes from the line of Rashmmi Shetty from Dolat Capital. Please go ahead. Yeah, good evening. Thanks for the opportunity. Again, on this peptide and CDMO part, while you have given the target for three years, how should we look at this year? We have already done our quarterly run rate of INR 60 crores, last two quarters have been very good, and you said that the second half will also be stronger. In terms of entire year, how should we really look at it? This is Sanjay. I'll take that question. Our objective is a very single force. Turn PAT positive for this year is the target that we are taking. Okay. In terms of revenue, the quarterly run rate should be maintained for next three quarters also? Or we will see a big pickup in the second half? There will be a variation quarter on to quarter, but if you're multiplying that by four to get to annual number, that's the minimum that we expect. That's the minimum. Understood. Got it. In terms of EBITDA, okay, I understood that you'll become PAT positive this year, and you said that quarter four in last con call, you all said that you all have turned breakeven in terms of EBITDA in this business. This year, there would be a decent margin with the ramp-up, or it would be just few basis point above the margin that is high single digit or something like that? Rashmmi, I think we will stick to these two numbers. Turning PAT positive is the biggest ambition that we have for the year, and we'll focus on that. We cannot drill deeper beyond this. Of course, EBITDA means positive on that PAT positive numbers, but I think we'll restrict as far as numeric goes onto these two numbers. Okay. All right. My second question is related to oncology segment. Just want to understand that where do we stand currently from the Vizag plant in terms of API filings, API launches, or oncology formulation, oncology exhibit batches, where are we ramping up? If you can give a broad picture on that part. Priyanka? Sure. The Vizag facility was till date used for CMO activities, and also we had in the past developed some APIs, and we were selling APIs that were both customer-based, customer APIs, and also our own APIs. The numbers and contribution from the oncology business has been fairly minimal so far. Going forward, though, starting in FY 2028, 2029, we launch our first self-developed product, which is fully backward integrated, and it will have geographical presence, geographical expansions. We'll be launching it across many countries. Currently, to add to that, we have close to nine to 13 products in different phases of development. Oncology is a huge area of our growth today within oral solid dosage platforms. Most of the products, if not all the products, we're fully backward integrated on. This is going to be a huge growth driver for us. These nine to 13 products, you said it's in the oral solid space, right? In the oral solid space. Correct. Okay. Priyanka, one more question related to the U.S. launches. Put everything together, GLS, GPI, everything together, how many launches are we planning for this year? This year, pending the FDA approval, we are expecting about nine launches. Overall, we have about 18 approvals that are still pending, nine of which will be launched immediately after the FDA clears GGP, plus another one product from GPI, the remaining are IP-based. We have about 18 products that are pending approval. Okay. Got it. Thank you. That's it from my side. Before we take the next question, reminder to all the participants, to ask a question, please press star and one. The next question comes from the line of Krisha Kansara from Molecule Ventures. Please go ahead. Hi. Am I audible? Yes. Sure. Firstly, congratulations on a good set of numbers. Two questions on the peptide side. Firstly, what is the amount of CapEx that we have budgeted for the peptide intermediates plant that we plan to set up in India? Secondly, we had achieved a positive EBITDA level in peptides business in the last quarter. However, the current quarter shows a loss of INR 12 crores. I just wanted to understand the reason. Is this because of a lower revenue base on a quarter-on-quarter basis, or did we have some kind of a one-off cost which was related to particular projects? These are my two questions. Sanjay? I'll take the second one first. There's not a big one-off there on the quarter. It's more a question of project to product mix, and within the product, the product mix itself. The OpEx component obviously has a quarter-to-quarter variation. It's not even across all the quarters. That's the two factors. The third factor is some of the projects that we do is fairly long in its cycle time and lead time. Some of the project that we do does not get monetized during the current quarter. It gets carried forward and the project value is realized later in H2 or later in the time. These are some of the reasons why we have a negative EBITDA for this quarter. Just like our revenue, our cost basis or our delivery gets affected in terms of longer cycle time, hence, the profitability also have these bumpy rides along the way. Coming back to your first question around our estimate of our India investment. Our initial estimates suggest roughly about INR 100 crores numbers on the intermediate side. If you take it forward to the API side, we are starting with INR 200 crores of investment plan. Both will not be realized during the first year, these are our initial estimates to begin. Understood. Roughly INR 300 crores of CapEx. Just one last question. What was the remediation expense that we recorded in Q1 FY 2027? Krisha, this Q1 is not significant. It is largely in line with what we have been incurring. Okay. Only within last year, H1 was the highest. Otherwise, we are in the range of less than $1 million per quarter, last couple of quarters. Understood. Thank you so much. All the best. The next question comes from the line of Yashika Gogia from Nirzar. Please go ahead. Hello. Am I audible? A little faint, Yashika. Maybe a little louder. Okay. Am I audible now? Hello. Sorry to interrupt, ma'am. Your voice is not clear. Can you please come closer to your mic? Hello. Am I audible now? No, ma'am. Your voice. Hello. Is not yet audible. Hello. Hello. I request you to use a handset, please. Yeah, I'm doing that. Is it okay now? Yes. This is much better. You may go ahead. Greetings of the day and congratulations on a good set of numbers. I just have two pointers. Since I joined a little late, I might have missed that. The first one is, our complex generics have shown a good result, basically 50% hike in Q1 FY 2027. What's your guidance regarding the same for the medium-term target, and is the current pace of margin accretion from the shift sustainable? The second one, I just wanted you to highlight upon the Genome Valley 10 billion dosage U.S. FDA approved capacity. If it's possible for you to let us know what's the current utilization level, and over what timeframe do you expect it to reach a steady state utilization? Just these two pointers. Rest, I'll circle back to you. We have clarified the issue. I'll take the first question. Yeah, Priyanka, go ahead. I'll take the first question on the complex generics. Like you rightfully said, today's contribution is about 50% of the overall numbers, and it will increase significantly over the quarters and from 39% YOY. The growth is sustainable, especially if you look at it from an absolute number percentage. The reason I'm specifically calling that out is because there are going to be products outside of the legacy five that are going to be launched within the integrated basket as well. Both the baskets will grow, both the baskets, especially the new launches on the integrated side, are going to be reasonably profitable. Of course, complex generics will lead the path. Yashika, on the second question, GLS currently the utilization levels are very low. By the year-end, we are expecting it will cross 50%. Noted. That was quite useful. Thank you so much. Thank you. The next question comes from the line of Ritwik Sheth from One Up Financial Consultants Private Limited. Please go ahead. Yeah. Hi. Good evening, sir. Sir, couple of questions from my end. Firstly, on the controlled substance, what is the launch pipeline for controlled substance for FY 2027 and then next year in FY 2028? Priyanka, you want to take that? Yes. On controlled substances, we have about one to two launches coming up in the next year and a half to two years. In total, we have about four, five launches that are IP-based. We can't really disclose the timing of launches because of ongoing litigations, et cetera. We have about five more products in addition to that within the control space. Okay. FY 2027, there won't be any launches, but starting FY 2028, you expect one to two products to be launched. You're correct. Please remember that we have products that we have launched where we have not achieved our target market shares yet because the controlled business is very different than a traditional molecule business. There will be growth from existing molecules in the controlled space, but no new launches this year. You're right. Right. Okay. Got it. In this quarter, we grew the complex product segment, which we report by almost 50%-55% YOY. Is it fair to assume that bulk of this growth would be coming from controlled substance? Complex, if you look at the investor presentation, is broken down into three segments. While we won't get into details of how much each segment grew, the overall segment has grown in totality. Okay, sure. Second question is on R&D. This quarter, we spent higher than a normal run rate of 5%-5.5%. Is this the run rate that we should expect for the rest of the year as well? Yes. This will be around 5.5%- 6% as we go ahead. Sir, where are the spends going in terms of if you can segment between complex and the other baskets, complex products and the other basket, what percentage would be going in the complex products? If you can give some color. We won't give a breakdown of the total percentage breakdown. If you look at the investor presentation again, you'll see that the percentage of complex generics has been going up, and it's been very evident with the kind of filings we've been doing and the kind of approvals so far, supplies that we've been receiving. Overall, integrated will also be a part of the basket, will be an integral part of the basket, a majority of the spend will be towards complex generics. Okay, sure. One final question on capital allocation, especially on dividend. We are generating significant free cash flow and we'll be using our cash flow for CapEx and then still we'll have some surplus left. What is the thought on our dividend payout policy? [Non-English content], we have the dividend payout policy. So far we have been conservative. Going forward, we'll relook at it. Internally also we are discussing. We'll relook at it if we can increase. Okay. Great, sir. Thank you and all the best. Thank you. The next question comes from the line of Sohani Singh from Ross Capital. Please go ahead. Hello, this is Sohani. Good evening. I just had a couple of questions. Europe has remained a strong growth market on year-on-year basis. However, there was some sequential softness during the quarter. Could you help us understand what drove this and whether it was largely timing related or indicative of underlying demand trends? Priyanka, she's asking for Europe. Could you please repeat the question? Okay. I just needed to understand what drove the sequential softness during the quarter and whether it was largely timing related or indicative of any underlying demand trend. It was not really a demand trend, but I would say it's a mix of both. We do have demand, but one big aspect that played out here is the cost pressures on the legacy five business. As you can imagine, Granules has always been a long-term partner for our players. There have been situations where we couldn't pass on very much of the pricing, so we held some of the demand in conversation with our customers. It's primarily been a mix of intentional hold of supply due to pricing and costing pressures. The other thing is, the new areas that we're looking to gain market share in is primarily within the controlled area, where we want to grow sequentially, and we want to grow in a controlled manner. All the new approvals are still pending, that's why there has been a little bit of a flattish growth Q on Q. There's two reasons at a high level. Understood. That's good. On the development pipeline, could you provide an update on the pending ANDA approval? What do you want from us? It's all in the investor presentation. Do you want any information outside of what's in the investor presentation? I just needed to understand if there's an update on the pending ANDA approval. I answered this question a little bit earlier, there was a little bit of some information that I forgot to provide, I will just repeat my answer. In total right now from GGP, we have about nine approvals pending facility approval. The market size is about INR 11 billion. We have about nine products pending approval due to IP-related issues, so they will be launched as the IP expires, et cetera. We also have another five more, from the U.S. that are still pending approval. Some of them are IP-based, and some of them will launch on approval. We have a total of about 23, 24 filings that are still pending approval. Okay. That helps. Thank you so much, and all the best. Thank you. The last question comes from the line of Sameer Baisiwala from Sakman Capital. Please go ahead. Hi. Thank you. Good evening, everyone. Quick question on onco products, Priyanka. I know you replied to that, but how many ANDAs have you filed so far? We have filed two ANDAs so far. Two ANDAs, we filed one ANDA in the U.S., two dossiers in Europe, and we filed about almost 14 extensions of the same dossier in various countries. Okay. When you say that this will start to ramp up in FY 2028, I presume this is all non-U.S. It's a mix of U.S. and non-U.S. Okay. How many do you target to file in the current fiscal for the. Unfortunately, we don't give that guidance. You can look at the run rate. The run rate has been improving over the last couple of quarters, it will be on the basis of that. Okay. No, sure, you have nine to 13 under various stages, I think you said you'll file one or two in the U.S. I just wondering. Okay, no worries. The one or two products were filed last year. We have nine to 13 at various stages, only within oncology. There's also products within the other complex range and also integrated basket. Yeah, sure. Of course. I was just focusing on onco for now. Just moving on, Priyanka, for your U.S. facility, GPI, what's the current utilization and how much more growth potential does it have? Let me take that, Priyanka. Please go ahead. Okay. We are currently at around 70% capacity utilization. We have quite a large leeway to go ahead. We are also doing a little bit of expansion, which we think we will need by end of 2028. Okay. One thing I just want to add to what CMD said is that the products that are made in GPI are not just pure volume-based products. These are low volume, high value products. In terms of capacity, 70% utilization cannot be looked at as equal to, say, 70% utilization in a large volume facility. Yeah, sure. Essentially, we have a lot of room to play there. Actually, that's what I was coming to. In terms of your utilization of quota for controlled substance key products, how much more do you think you've got room for the current year? If you can talk about that. I didn't understand your question because quotas are provided twice a year. There's a lot of factors that go into receiving your quota. I'm not really sure I can answer your question at this point. Oh. If your answer is if we have quota, yes, we have sufficient quota to cater to all our customers' demands. Yeah, I was basically saying that if you were supplying X in fiscal 2026, based on increased quota, how much can you do in fiscal 2027? In that sense, it's a growing product. I mean, that's what I just wanted you to confirm. Like I said, with whatever products we have, we have more than enough capacity and more to get to our target market shares and also more. Okay. That's fine. One final question, Priyanka, is any thoughts on the launch timelines for Dyanavel and Adzenys? Unfortunately, these are all litigation-based products. I do not have the freedom to talk about these products, the timelines, et cetera. You think this can be in 2027 calendar or it's going to be beyond that? I'm sorry, I really cannot answer those questions. Okay. No worries. Yeah. Thank you so much. Thank you. The next question comes from the line of Vignesh Iyer from Sequent Investments. Please go ahead. Thank you for the opportunity. Just one question from my side. I remember in the last call where we had our internal projection of around 33% of the working capital as 33% of the sales. We've managed to, due to mix and despite the cost escalation, deliver around 29%. Do we still stick to that 33% as a more conservative approach for the year or we can do something similar to what we did in FY 2026? Vignesh, thanks for the question. What we said in the last earning call is in the range. We would be in the range is what we have said. This quarter, we have effectively reduced the receivables significantly with a higher increase in sales in U.S.A. that the receivable days are lesser. We move forward when the growth are expected further, U.S. as well as non-U.S., maybe slight increase in receivable days is possible, but overall, we will still try to control the overall working capital blockage and try to efficiently manage the working capital for a better cash flow generation. Okay, sir. Got it, sir. That's all from my side. There are no further questions, I would like to hand the conference over to the management for closing comments. Thank you, and over to you. Once again, ladies and gentlemen, thank you very much for attending this call. In case any further clarifications are needed, please reach out to us. I wish you all a great week ahead. Thank you. On behalf of MUFG Investor Services, that concludes this conference. Thank you for joining us. You may now disconnect your line.