Ladies and gentlemen, good day and welcome to Q3 FY 2023 earnings call of Glenmark Life Sciences. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Saumya Rao. Thank you, and over to you, ma'am. Good evening, everyone. I welcome you all to the earnings conference call of Glenmark Life Sciences Limited for the quarter ended December 31st, 2022. From Glenmark Life Sciences Limited, today we have with us Dr. Yasir Rawjee, our MD and CEO, and Mr. Tushar Mistry, our CFO. Our board has approved the results for the quarter ended December 31st, 2022. We have re-released the same to the stock exchanges and updated it on our website. Please note that the recording and the transcript of this call will be available on the website of the company. Now I'd like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies, may contain certain forward-looking statements that involve risks and uncertainties. These statements are based on the current expectations, forecasts, and assumptions and are subject to risks and uncertainties which could cause actual results to differ materially from these statements depending upon the economic conditions, government policies, and other incidental factors. Such statements should not be regarded by recipients as a substitute of their own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. With that, I invite Dr. Yasir Rawjee to say a few words. Thank you, and over to you, Dr. Rawjee. Soumi, thanks. Good evening and welcome to everyone, to our Q3 earnings call. I'd like to wish everyone a very happy New Year. Hopefully, this year turns out to be nice for all of us. A real quick view on how we look at the world situation. The economic scenario continues to remain uncertain, with talks of recession. You know, inflation, of course, is at high levels, and leading to slowing consumption, some layoffs. You know, the overall geopolitical situation is uncertain, which points out to probably a roller coaster year. Now, closer to home, we have the China situation. Frankly, we think that this is going to ease off, okay? With the, you know, the Chinese government taking that decision of, you know, allowing travel. The Lunar New Year travel is coming up and our own information from our, you know, our partners in China is things are good. Manufacturing is back. Essentially we are going to hopefully see an easier supply chain situation. The only thing that might hinder this could be the whole situation with the freight and, you know, the freight movement. As a result of that, you know, there could be some impact on industry because we do believe that stocking up helps. I mean, it's been something that has helped us in the past, we would continue to take that approach. Coming to the cost situation with the gas and oil prices easing off, we're already seeing a better situation with solvent prices and that has an impact directly for us as well as on the raw material prices that we use. Again, I think the news on this front is improving and the China situation also will improve going forward. Coming more directly to our business, we've had a pretty good quarter. We've grown 24% on our external business year-over-year, and 2% on a sequential business. Basically, we got some real, you know, good news out of our India DMF business, Europe, as well as Latin America. This has helped us to keep the business going extremely well. The GTL business also has seen recovery. We've seen 19% growth on a sequential basis. If you recall, the business with Glenmark Pharmaceuticals had bottomed out in Q2, but we are seeing good signs with, you know, their demand. On the generic API business, we grew overall 5.9% sequentially and 1.8% on Y-o-Y. This was largely driven by the regulated markets. The CDMO, though, was down 10% sequentially and 31% on Y-o-Y. I'm sure it'll come up in the question hour, so I don't get into that right now. Overall, if you see Q1 was probably our low point when we started off the year. Ever since then, we've seen a pretty strong recovery on all levers of the business, be it, you know, our generics business, driven by various markets. The GTL business has also started to track well. I believe the CDMO business will also bounce back nicely in Q4. What has sort of helped us along is that if you look in the nine months, the overall picture, we supplied, you know, launch APIs for five new products. This has seen traction in the market. We've also extended seven APIs to, you know, existing customers across geographies. This really is the mantra, I mean, for us in terms of having a very resilient business. We highlighted this in our investor day, you know, where we've shown that over the last few years we've very effectively reduced our dependence on the top customers as well as the top products, making the overall business extremely resilient. This is possible when, you know, at the portfolio level, we have a large portfolio of low to mid-volume APIs with high realization. This also has a bearing on how our capacities are used, which are used exceedingly, you know, extremely effectively. Okay, you know, going forward, we've got 23 products in the development pipeline. Four ion complexes are in the pipeline, one has been filed. On the high potent side, we added one more molecule to our seven molecules, and so we've got eight now. Four of them are ready to supply exhibit batch quantities and production is now on at our new oncology block, which we built in Dahej. That came online this quarter in Q3, and that's going very nicely. In Dahej we also added 240 kiloliter capacity, and that has also started being used pretty quickly. Good, good upside in Dahej, you know, on the servicing side. As far as the Dahej CapEx goes, we are nearly complete. We should have it up and running in Q4. Of course, it's a very large capacity that is coming online, so we are mindful of the fact that, you know, we don't turn on the lights for everything, you know, on day one. We'll go in a calibrated manner so that we only utilize what we need. As and how, you know, we get more and more demand for the capacity, for that capacity, we'll keep, you know, utilizing it. In summary, I would say that the STEM business continues to grow extremely strongly across markets. There's a, there's a pretty good recovery on the GPL business as well, the Glenmark Pharma business. The, the demand on the CDMO side will also pick up. So all levers of business looking up. With that, you know, thank you for joining the call. I'd like to hand it over to our CFO, Tushar Mistry, who will take you through the financial performance. Yeah. Thank you, Dr. Yasir. Hello and good evening, everyone, and a very good year to all of you. I would like to briefly touch upon the key performance credits for the quarter, and then we'll open the floor for Q&A. We registered a revenue from operations of INR 341 crores for Q3, with a sequential growth of 6.2% and a year-on-year growth of 3.5%. Gross profit for the quarter was at INR 276 crores, up 6.4% quarter-on-quarter and 2% year-on-year. Margin for the quarter was 31%, up 50 basis points as compared to same quarter last year. On a sequential basis, there was a slight decrease in gross margins. Gross margins are largely driven by product mix and PLI benefits during the quarter. EBITDA for the quarter was at INR 70 crores, marginally lower on sequential basis and up by 1.6% on year-on-year basis. Our proactive cost optimization measures have helped us maintain free EBITDA margins, which was at 28.1% for FY 2023 and 30% for nine months FY 2023. Lower EBITDA margin on sequential basis was mainly driven by momentum in gross margins. We are witnessing increase in capacity at the Dahej facility as it comes online. I would like to highlight that we will be commissioning the block module-wise, which will help us keep the costs in check and to ensure steady margins in coming quarters. Profit after tax was at INR 605 crores in Q3 FY 2023, registering a growth of 1.2% year-on-year and a marginal de-growth on a sequential basis. Coming to segmental results, external business grew strongly by 22% on year-on-year basis and at 2% on sequential basis. External business was driven by India, Europe and Latin. US business saw healthy recovery during the quarter. GPL business also recovered strongly, showing 19% on sequential basis. GPL contribution to the revenue was 29% during the quarter. Generic API revenue for the quarter was at INR 480 crores, registering a growth of 1.8% on a year-on-year basis and 5.9% on a QOQ basis. Continued momentum in the external business coupled with revival in GPL business led the growth in the generic API business. For the quarter, the CDMO business was down 9.6% on a quarter-on-quarter basis and 31% on a year-on-year basis, registering a revenue of INR 58 crores. R&D expenditure for nine months was at INR 49 crores, which was 3.2% of sales. We believe R&D expenditure to stay around 3% for FY 2023. Coming to working capital for the business. Working capital days for nine months are at 178 days. During the quarter, we witnessed better receivable collections and slow growth in inventory leading to improved working capital positions. This has helped in generating strong cash from operations. We continue to remain a net debt-free company with cash and cash equivalents of about INR 420 crores on the books as of December 31, 2022. To conclude, reviving demand in the regulatory markets coupled with excess capacity availability puts us in a formidable position for growth in the coming quarters. With that, let us start the floor for Q&A. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets for asking of questions. Ladies and gentlemen, we will wait for a moment for the question queue assemblies. First question is from the line of Tarun Agarwal from Old Bridge Capital. Please go ahead. Hi, good evening, congrats on very strong traction on your external business. I have three questions. One, you know, what is the fixed cost suppression that we should be seeing on the P&L from Q1 onwards, given that we'll see the Ankleshwar plant coming in as well as the H ramping up? That's one. The second is, you know, when were to see in Q1 and Q2, obviously, there was some FabiFlu delays. My sense is that in Q3 FY 2023, there isn't any FabiFlu or there isn't any material FabiFlu at the pace. Despite that, those 60 of the GPL businesses mixed up. On a year-on-year basis, it's still down materially. What are the factors that are sort of driving that and what's your outlook there in terms of your conversation with them? Third question is, into the current quarter, if one were to eliminate the impact of the PLI benefits, I would suspect there is actually a feasible 250 basis or 300 basis gross margin compression from the year of book period. If you could just elucidate a little further in terms of, is it a one-off or is it because of, you know, structural reason? Thanks. Your first question on account of fixed cost on account of the H-Block and Ankleshwar. We expect on a quarter-on-quarter basis for Q1 onwards, there should be an increase of about 7-8 crores on the revenue expense front. Additionally, there will be some two and a half crores of participation in how we see this cost from Q1 onwards. Yeah, FabiFlu in Q3, we didn't have FabiFlu in Q3 last year. On a comparative basis it is like for like comparison and it is de-growth on a year-on-year basis. While on sequential basis it is going up. More importantly for us, we are looking at it is that demand from GPL is coming back to normalcy thought. It may not have come back fully, but it is coming back to some extent. We expect that to be little better in Q4. On a gross margin basis, again, you are right. There is an element of PLI which is there in the gross margin. To that extent, there will be some element of friction on our or contraction in our margins, which is more driven by from the market scenario perspective, where you generally see some pricing impacts on the products, which does have plus in the current year, you would be aware that on the cost front, there have been escalations in key raw materials, key starting materials as well, as well as on solvents. Overall that PLI has helped us to recover from that margin compression. That's where we are on the margins. As we're witnessing freight normalizing and solvents coming off, so would it be safe to presume that maybe in this quarter or the quarter later, we'll see the gross margins inching up on a PLI basis? It'll definitely have a positive impact, Tarun. Okay. Thank you. Thank you. Any participants who wish to ask a question at this time may please press star and one. Next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Yeah, thank you for taking my question. Good evening. Just the first one on, you know, the guidance for fiscal 2023. I remember we had earlier guidance was for single digit growth for full year 2023. Nine months is at -4%. you know, from a fourth quarter perspective, we stick to that guidance, which would probably mean double-digit growth overall company for folks. Just, that's my first question. What are the thoughts on the fourth quarter and for the renewed or refreshed guidance for fiscal 2023? Shyam, we'll have a strong fourth quarter, we believe. Okay. Now how much it's gonna end up impacting on the overall year, we don't know yet, unlikely that we will see double-digit growth. Okay? Our growth will probably in the single digits. You see the way Q4 has Q3 has helped our overall number, right, on the nine-month. We believe that Q4 coming in strongly will have a positive impact on the overall year. If GPL bounces back, the way we think, right, then, you know, I mean, with external business being very strong, you know, from the demand as well as our ability to service, right, there, we are pretty sure in terms of how that is moving, and GPL demand is also, I would say, shaping up pretty nicely, as Tushar just mentioned. The overall impact we'll see, but I think we would be in the single digit, right, growth. Got it. Helpful. When we look forward, second question, just, you know, in our aspiration to be a low to mid-teens kind of top-line growth, you know, we at some point or time need GPL to start growing, right. Do we have, either there is a visibility or you think it'll keep declining over time? I thought we had an aspiration to have 1/3 come from GPL. We are at 30% in quarter three, let's assume. Which is gonna change? Is it gonna be that GPL demand comes back to a more normalized level and also growing at, say, mid to double digit, let's assume, and the external business, like you said, this quarter has grown 24%, so we hope it sustains. How should we sort of sight a more medium-term top-line growth? Okay. Let's break it up, yeah, Shyam. Okay. Look, as far as GPL's contribution to the revenue, it would be around the 30% level going forward, right. Over the long term, there'll be a relative decline. Really, I don't think we are talking about that period now. Okay? We are talking about a 30% ± 2% kind of contribution from GPL and that growth from here on for GPL. It won't be the same level of growth as our external business because there the portfolio, the spread across geographies is much more certain and pretty solid, I would say, right. When you put that together, there will be a lesser contribution of growth from GPL's side, and a bigger contribution from the external business, which would still put us in the low to mid-teens growth in the overall business. Very helpful, Yasir. My last question is just on the update on the pipeline, both your iron complex and other complex filings. If you could just give us an update, please. Thank you. Sure, Shyam. That's going, that's going pretty much on track. I mean, like I had mentioned a couple of times earlier, complex products do take time because there's not only a chemistry element which is complex, then there is a characterization element which is also fairly complex because we need to prove to regulators that, you know, our API is gives a product that is, you know, similar to the reference listed drug, the RLD in short. That's where it does take time. We factor in that time. Our customers also understand that, you know, it's going to take that level of time because, you know, it's a complex product. It's on track. Our iron complexes are very much on track. As far as the onco and the, you know, the high-potent portfolio goes, as onco as well as non-onco, right? We've added one more molecule, so we've got eight molecules. Four of them are already validated at the lab level and are being taken in the plant. Two of them we produced in our new H-Block, and another two are in line to be produced. That's going well also. Right? Overall, portfolio is chugging along very nicely. Apart from this set of molecules, we've got our regular molecules that, you know, are also coming along nicely with a lot of customer interest across geographies. I mean, all in all, I would say that, portfolio is nicely positioned to keep, you know, adding newer and newer assets, you know, into our pipeline. Last question, if you have, just following up on this one. When are we likely to see these getting monetized, if there is any, like, few products, or any quarters we need to start looking out for? Okay. Sham, see, this year itself, like I said in the commentary, we've supplied launch APIs to four products, right? Mm. Because we changed the focus on the pipeline four years ago, right? When the company split, right? Such that we are going to focus on whatever launches in this decade. Okay? Mm. We are not going beyond that. We expect that the run rate of new molecules will actually improve as we go along because we continue to populate the you know, the development portfolio with those opportunities, you know, largely with those opportunities. As a result, we will see more and more molecules monetizing within this decade. In the next five to seven years, we expect to see a pretty healthy addition of these assets, right, as we go along. Got it, sir. Thank you, and all the best. Sure. Thank you, Shyam. Thank you. A reminder to participants, please press star then one to ask a question. The next question is from the line of Anand Chenubutal from BMSGL Capital. Please go ahead. Yeah. Thanks for the opportunity. I have just one question. Basically, how does the end of China's zero COVID policy work for the prices in general, key sourcing materials and APIs as such? Okay. I mean, look, based on the confidence of the Chinese government in opening up everything, right, we can rely on the entire supply base, right? It's no longer a case of someone will start production and someone else will not, right? It's, it's very clear that our suppliers are, you know, they're there, they're open for business. How that helps is that we are able to hopefully negotiate better prices or, at least not see any major cost escalation. At the same time, it may end up shortening lead times, which recently, in recent quarters has gone up, okay? As a result of which, we've had to stock up more on the inventory side. In both cases, on procurement costs as well as on our ability to source materials with shorter lead times, is going to be positively impacted. Okay. All good. Thanks. Sure. Thank you. The next question is from the line of Sudarshan from Mount Kellett Finance. Please go ahead. Hello? Hello? Yes, please go ahead. Yeah. Hi. Please go ahead. Hi. Hi. My question is very simple. two, three questions, basically. On the gross margin side, what is our, what do you think, what is our standard gross margin that we can achieve in these current circumstances, basically? Are we seeing, let's say, one year, two years upside in the gross margin? Particularly, is there any difference between our external gross margin as well as from Denmark? Okay, there's nothing like a standard gross margin, Mr. Sudarshan, okay? simply because that's not the way the business works, right? We are across various geographies, right? we have older, mature products and we have newer products that command a better price with the margins. it's really the way how the overall basket shakes out. Okay. The other element is that the world has kept changing and will keep changing, right? We don't expect it to come to any kind of standard state or, you know, any kind of steady state, right? As a result of which, there will be pressures on the cost side. Okay. Let me. Yeah. Let me reframe it in that circumstances. Sir, we have seen cycles like where companies has operated at a much higher gross margin and at a depressed gross margin also. My point was like at what point in the cycle we are, like we have seen particularly in several areas like across the countries when I'm talking about like overall margin, that means across the geographies I'm talking about. We have seen across the cycles, let's say last 10 years we have seen higher gross margin also and lower gross margin also. Giving our our own company where we stand like we feel. See, if you look at our track record in the last four years, right? We've maintained 30 plus or minus 2% EBITDA margins, right? You can look at our track record. Given the fact that the DNA of the business is not going to change because we are pretty confident, right? Like I put in my summary, state, you know, in my opening remarks that it's the way we've crafted this business. Okay. We've crafted it so that we continue to push on, you know, low to mid volume, high value APIs, right? Our ability to, you know, derive benefit in terms of the, you know, value is extremely high across the various levers, and that allows us to maintain that kind of margin. The margin really flows, the EBITDA flows from the gross margins, which have also been operating in that, you know, 51 ±2% range. Again, you can go back and look at our data, right? Over the last four years across quarters and in spite of the fact that, you know, the world has been going through a lot of challenges, which is impacting, you know, many things, we've still managed to retain this level of margins for this business. Okay, on the way, on the external. Yes, sir. Yeah. business, right? See, we've explained this a few times before, right? That basically all our pricing is done at a product level to all customers, right? It's a arm's length business with Glenmark Pharma. We don't charge a single price for any or margin for any product. It all depends on how well we can compete with other suppliers for their business. Where we compete well, we take more margin, and where we feel that the competition can, you know, take the business away, we obviously, you know, to take the business, we may go with a lower margin. I mean, net-net, that's how we are working, right? Just like we work with any other large customer, right? We've got, apart from Denmark, some very illustrious companies with whom we work, and we've got large business, you know, with these other companies as well, and that's the same approach we'll be taking with Denmark also. Okay. Now, sir, with this, the big addition and like, population, it's a large of like addition. We will almost reach like, as per your projection, like 1,205 KL. Can you like, at what during which year or let's say, how much time will we take for us to fully, to become fully operational? That means like, what I mean to say, like reasonable, what can be our peak level turnover after this capacity starts operating at an optimal level? At what point of time we can achieve that? Okay. Tushar you want to take this question? Mr. Shekhar, actually, if you see our FTTR are in the range of three times based on historical asset terms. Now, the impact of this new CapEx, you will see this asset terms coming down to some extent. We don't expect this to come down very significantly. Why, we will still try and retain it between 2.5 to three times. That's how this new capacity will keep on adding to our overall revenue. If you need to answer your question, our fixed turnover ratios will still be modestly higher on the higher side. Okay. That's it. Thank you. That's all my side. Thank you. The next question is from the line of Charul Agrawal from Bank of America. Please go ahead. Hi. Am I audible? Yes. Okay. Good evening, sir. Thank you for taking my question. My first question is on the Ankleshwar plant. Given that the plant is supposed to be commissioned next quarter, have the necessary costs already been included in this quarter, with regards to the employee addition, or do you expect to incur the costs for the plant to go up from here? We have hired people, right? Charul, the thing is with the Ankleshwar plant, right, it's an intermediate block only. Okay? There's a different dynamic here in terms of the people as well as, the capacity addition to, you know, the plant. It's on the intermediate side, right? Although, yeah, to address your question directly, we have hired a few people and there is a small element of cost, but not very significant. Okay. In terms of the margin benefit from Ankleshwar plant, when do we expect to see that coming in? It will come, right, in two ways. One is on the GI project, right, which is going to be commercial soon, one of them, right? The other is on better overhead recovery at the product level. We'll start seeing it. I mean, it's not like a step function, right? It's a sort of continuum in terms of, you know, getting better and better because these, this is a large capacity at a unit level also. We've got like 16 KL reactors in this facility, which typically we haven't been investing in historically in the Ankleshwar site. This will all add very positively to, you know, at the product level at for the products which we do there. Okay. Thank you. I just have two more questions, if there's time. Firstly, on CDMO business, I want to understand that what was the reason for dip this quarter? What is, I mean, questionable at a customer level and how do you expect it to pan out over the next few quarters? Secondly, I wanted to understand that, given that, the solvent prices have gone down for a few products, has it impacted realization yet or is it something that might come out over the next few quarters? The solvent impact will start impacting us in the next quarter, this quarter, I mean Q4 and beyond, right? That is very clear. Okay. With respect to the CDMO business, see it has been the end of the year for some of our customers, so they've also wanted to keep inventory levels under control, right? That's why we've seen a bit of a muted demand. Also we've got to realize that our CDMO business is based on three APIs. With this muted demand, right, you know, on a relatively small set of APIs, we do get impacted. I mean, the number moves around much more, right? The variability in the number is much more. However, we are pretty confident that in Q4 it will bounce back nicely. Okay. Because again, it's the beginning of the year for the customers, for our customers, right? They would not be, you know, as prudent or you know, they would not cut corners when ordering API for, you know, Q4. Thank you so much, sir. Sure. Thank you. A reminder to our participants, please press star and one to ask a question. The next question is from the line of Imran from Longbow India. Sir, please go ahead. Hi. Thanks for the opportunity. I believe I'm audible to everyone. Yes. Yes, please go ahead. Please go ahead. Thanks. My questions are pertaining to the capacity expansion that you are doing. Number one is on Dahej, the recent capacity, you know, that we have added. What kind of, you know, benefit in terms of revenue you are targeting from this facility, let's say in the next one or two years, assuming it runs at a, you know, 70%-80% utilization? You want me to answer and then you ask your next question? Yes, sir. Yes. Okay, sure. Dahej capacity C is basically going up from 140 KL- 380 KL. We have in the last four to five years validated many APIs out of Dahej which are becoming commercial. Also some of the APIs that we launched in the last couple of years have a much bigger volume of take now, right? There is already an immediate impact of Dahej capacity that we will see in the forthcoming quarters. Which is good for us. I mean, we are able to service better. I answered Charul also, you know, in terms of how, you know, the larger capacity, which is plant six, is going to impact, right, better overhead at the product level, right? All this put together is going to give us a much better revenue stream out of Dahej. Also we'll have a better margin profile, because this is the largest capacity. Right. Is there a range of, you know, revenue that you can give from this, you know, levers from this capacity that you can do XYZ, kind of grow re-revenue from this range, a broad range? Imran, actually my earlier answer I alluded to that guidance. You should look at our FTTR, the fixed asset turnover ratio. It is in the range of that 2.8 to three times. With this additional CapExes in the midterm or in the near term, this may come down, but not significantly. We expect it to be between 2.5 to three times overall from a revenue perspective. I believe you have not shared the CapEx number for this, you know, facility, if I'm not wrong. Maybe I'm wrong. No. We have said that the total CapEx that we have done in nine months is in the range of about INR 130 crores including everything, Dahej, oncology and some bit of the capacity that is coming up. This includes Ankleshwar, is it? Yes. Yes. Actually the second question is on Ankleshwar. I mean, I don't know how you know, coming up with this math of 2.8x, you know, asset turn. Because in your last phone call or maybe, you know, last phone call, you were mentioning that Ankleshwar is our backward integration and it would not give a lot of revenue, but, you know, it will help your customers to be more competitive. Is it, is it correct? Yeah. We just said this now. You have to. Yes, Imran, we just said this just now, right? When I answered Charul's question. You have to also understand that the CapEx on that Ankleshwar facility will not be very high as compared to the Dahej CapEx. Okay. All right. Thank you, sir. I'm done with my questions. Thank you. Thank you. Thank you. The next question is from the line of Darshan Vira from Investec. Please go ahead. Hi. Thank you for the opportunity to ask this question. Just confusion, while replying to one of the previous participants, you mentioned that the new products are higher margin than the older products. I just had a question that, you know, like say. It's a hypothetical question. Say the company were to stop investing in new products, you know, like say all the new development activity came to a standstill and the company just focused on its existing portfolio of products, how would the revenue and margin of the business trend over time? Would it decline the margin of the business, you know, because of pricing erosion? You know, would it increase because of process efficiency or it remain stable? Why would anyone do that? I mean, I don't know where this is going, but yeah, theoretically, yeah. If we were to stop investing in making new products, right, eventually the business would slow down, right? I don't know if you saw our investor, your base presentation. This was done on, I think, November 17th. It's there on our website, right? Basically what we showed is that there are three levers or rather three streams of how the growth is coming. There is the base business, right, that slightly degrows on account of price erosion. Okay. There is an addition to the base. We have a base enhancement by having a geographic expansion and a customer expansion by virtue of our competitiveness in the product, you know, through second and third generation processes. That actually helps our base to go up when you add up these two, right? Then on top of that, we have the growth molecules. That's how, you know, the whole business is built up. I mean, if you wanted an answer, right, you could see how basically these three slices of the growth are, you know, stacking up and then, you know, decide, I mean, how this would look. From a management perspective, we don't see any kind of, you know, why should we take that view that we don't invest in new products? The idea was more to understand the nature of the business, right? I mean, you know, in the sense that do process efficiencies, over time help in increasing the margin or does price erosion reduce the margin, you know, over a longer period of time? That was the purpose of asking the question. I appreciate the answer. I think you've clarified that, quite well. Sure. Thank you. Thanks for the question. You know, we don't get these kind of questions so this is a good check in back too. All right. Thank you. Next question is in the line of Tarang Agrawal from Old Bridge Capital. Please go ahead. Tarun, your line's unmuted. Please unmute your line and proceed with the question. Sorry. Hi. sir, I think you said the nine-month FY 2023 chipset sale is INR 130 crores. Is that correct? Yeah, that's right. Okay. What's the cash on books as on 31st December? Sorry, what? Working capital, you said? Cash on books. Cash on books. Cash on books is INR 5,000 crores. Last, on the CDMO business, I believe up till the last quarter, you know, there were three contracts that were driving the business. With fourth contract being probably, expected in fourth quarter. My sense is given how the press release was worded, that's been delayed. Is that correct? Yeah. The thing is that there are some regulatory filings that our customers continue to pursue. As a result of that, there are some delays, right. It won't happen this year. It'll probably happen mid next year, right. That we'll have to just deal with. Now going forward, I mean, until this comes in, predominantly the CDMO business will be running on the three contracts that you acquired quite some time now, right? Yes. There is good news, Tarun. There is good news on that as well. Okay. Two of those, one of them has already received an approval for an extra clinical indication. There'll be an upside on that. The second one is going for an additional clinical indication, and that result will again come probably Q1 or maybe Q2, right? That should also give us a significant upside on, you know, that project. It's not like that business is not going to grow. The one on these, you know, these three molecules also have a pretty good growth pattern, right, going forward. Okay. typically would it be safe to presume that Dahej and Ankleshwar will probably give up given optimum utilization in say Q2 of FY 2025? Would that be the right way to probably look at it? Yeah. I mean, Q2 FY 2025 is like, you know, nearlytwo years out, right? FY 2025. You said, yeah, 25. I think you said 25, right, Tarun? Yes. Yes. Yes. Yeah. That's like seven quarters out, right? Yes. Yeah, we should be fine. I think, you know, we should get to a very high level of utilization on both those assets, yeah. Wonderful. Thanks for the answer. Okay. Thank you. Thank you. A reminder to participants, please press star and one to ask a question. Next question is from the line of Ashwini Agarwal from Emison Advisors LLP. Please go ahead. Hi. Good evening, Dr. Rawjee and Tushar. The question that I have is that, you know, how do you think about the business from a 50-year perspective? Not too long term, not too short term. I mean, obviously there are levers for growth in terms of capacity that you've already put into place in the product pipeline. The margin levers to my mind would be obviously offering new products with a higher margin pro-profile offset by the base erosion as you pointed out. The critical piece there is the CDMO business, which at some point, if I look back into the history, used to be in early teens as a contribution to revenues and now in mid-teen digits as a contribution to revenue. Do you see a path to going back to 10%- 12% of revenue contribution from CDMO and could you help us understand what the pipeline of CDMO is? Sure, Ashwini. Ashwini, I don't think we, at least on a year basis, ever crossed into double digits on CDMO contribution. Right? In our best year we were close to 9%. Right? Now on a quarter it may, it may go into double digits, right? You know, so I don't know, at least to my recollection, we've never been in double digit from CDMO contribution perspective. To look at the question in a sort of overall, you know... See, because CDMO contribution will definitely grow, right? Quarter on quarter we have some challenges, right? COVID also had an impact, right? That brought it down to the seven, kind of 7% levels, right? We see and I just answered sudden, right, that even the existing molecules have got a pretty significant growth pathway. That is going to continue to grow, right? With this new project coming in, hopefully by mid-year next year, right, we should see a significant uptick on the CDMO contribution. And yes, from a margin perspective, it does play a positive role, right, on our overall margin because all our projects do have a higher margin profile, you know, on the CDMO side. Okay. Long term, we are guiding towards, you know, I mean, in the next three, four years, right, CDMO contribution will double from, you know, the 7%-8% now to, you know, maybe 13%-14% going forward. That's the way we are sort of pursuing it with respect to the lifecycle management opportunities as well as the Five-oh-five opportunities. Thanks for that. I was under the impression it was 12%- 13% about three or four years ago, and this is based on the expectations at the time of the IPO. I might have got it wrong, but that's as I remember. No, thank you for that answer. Happy to clarify if you find something, right, like... Okay, great. Just following up on Tushar's opening comments where you're expecting margins to be steady going forward. Were you looking at the 30% handle based on the nine-month number or were you referencing the 28% number which is the lower end of the kind of 28%-32% band that you were leading to? If you see we are on a nine-month basis at 30%. On a quarter basis it is 28%. We would say that we would be more inclined towards the 30s rather than towards the 28 side of the margins. Okay. Okay. Thank you and all the best. Take care. Thank you. Thank you. The next question is from the line of Ghanshyam from RSBN Business. Please go ahead. Hi, am I audible? Yes, you're audible. Hi, thanks for the opportunity. I just wanted to ask you, where are we on the Solapur greenfield expansion, and are we still targeting the same timeline? Are we still targeting? Targeting the same operational timelines of the Greenfield expansion. Well, I mean, approvals take time, right? Right. We received, you know, the EC. We've got the CTE, which is the consent for establishment and we have now applied for the consent to operate, right? I must say that it is going a little slower than expected, right? Or at least slower than, you know, what we desired, right? But it remains on track. I mean, we need to get that going because it's, it's gonna have a, you know, much longer term impact on our ability to service the growing business, right? One thing that doesn't come out in these calls is that our volume growth, while our revenue growth is at a certain level, the volume growth is at a much higher level, right? On account of erosion and so on, right? In order for us to have, you know, the ability to serve this business, you know, three years from now, right, we will need that Solapur facility and we're gonna continue to pursue it. No question about it. Okay. All right. One more question I had. The market has seemed to having an overhang about, when is the parent company going to reduce its stake in our company, to 10% or so. I think that's a question for you need to ask GPL. Thank you. Thank you. That was it. Thank you. Next question is from the line of Abhay Agarwal from VisionE ight Investments. Please go ahead. Good afternoon, sir. Earlier you used to give a bifurcation in terms of, you know, volume market share, value market share and key products, you know. That used to help us like to understand if the product is expanding its geographies, you know. Even though the volume share may go down, but the value share may increase. It was a good metric to track, you know, like how many products have we extended to the new markets. Can you still give that in your presentation? See, we don't speak at the product level, Abhay. Okay? I mean, I don't recall giving a product level. We have talked about market share, right, in the past, so I'm not so sure that we've done this. Tushar, you wanna- Yeah. See, it was a part of our offer documents that we had presented at Ind-Ra. Also we alluded to that in our Investor Day presentation Once. Will not make sense talking about it on a quarter-over-quarter basis, because that does not lead to any meaningful understanding of how the market is moving. We will see as to how we keep on responding to that on a year-over-year basis rather than on a quarter-over-quarter basis. If you can, like, you had, basically captured in a table, you know, less than 10%. If you can give that kind of guidance, you know, that will be helpful for us to track. We would want to stay away from any product level kind of guidances, but we have done some representation in our Investor Day on November 17th. You can refer to that presentation. Okay. Okay. Okay. Thanks a lot, sir. Wish you all the best. Thank you. Thank you. The next question is on the line of Chintan Mehta from Prudent Broking. Please go ahead. Sir, we have implemented strategy to store the raw material inventory, have benefited from that as well. Now as the raw material prices are falling, it will hit us negatively? No, I don't think because we are not taking such long positions where this kind of, you know, it's not gonna affect us because I mean, basically, we are talking about going from a lead time of 45 days- 75 days, right? The good part, there's a good part to it, right, which we follow and it has always helped us. That is we are able to give a, you know, longer-term understanding to our supply partners, right? We end up getting better prices than spot prices. Because in our business, spot prices are typically higher on the, you know, key raw materials. That's the biggest contribution to, you know, our cost. Now, you may be referring to solvents, right? Even with solvents, right, if you negotiate it right, you know, and then on solvents, we don't take such long positions or either, right? I mean, when I was referring to the inventory, I was referring to the key raw materials that, where the lead times have gone up. On solvents, we have a much tighter view, and there, yeah, what you're saying there, does apply. We are clever about it, hopefully. It's anyway. Sir, we will continue this strategy or with China reopen, we will expect increment in working capital days or inventory days? Hopefully, if the freight situation improves, Chintan, right, we will. Obviously we don't want to be holding, you know, longer inventories. Even if we can shorten it, you know, our holding by a few days, right, that will help us, right? Not at the cost of business. Okay. Okay, sir. On let's say for example, Ankleshwar plant, we are doing backward integration for our top products. If we want to rate our backward integration, we will be the most cheapest for this or product or there are any other clear competitor who are already making from most backward? Yeah, that's a good point, right? I believe that, you know, our approach for BI has been driven by supply security as well as margin improvement. We are not doing backward integration for everything, right? We are doing it only where it makes sense, right? Helps us to keep a position where we already lead the market. When you're already in a leading position, right, you are in a leading position, so if you improve it further, it's unlikely that competition will come and get you. I take your point that yes, it may happen that if the competition is also backward integrating, they will also get that benefit. You see? Difficult to answer. I mean, it would vary from product to product. The decisions that we have made on backward, on the portfolio where we are backward integrating are driven by an already dominant position in the market. Okay. I have a general question to the business. Our parent company is Glenmark Pharmaceuticals. Can pharma companies pay back to the R&D? Let's say, I mean, on CDMO, every company want that their IPs get protected. This will make a contract, then to work with us. Let's say even in our API. I'm not sure I understood. From whatever I understood, see, we are only an API company. Okay? In a CDMO business, if the intellectual property is coming from our customer, we would be, you know, extremely respectful of the intellectual property that our customer is giving us and we protect it and not misuse it, right? I mean, that's... Is that where you were going? Yes. My question is how we make the strategies, for example, to win the same business which Glenmark is looking to supply the same. For example, it's cardiac where it's supposed to current as well and Glenmark as well. I think let's not get into that level because, Vishal, you want to? No. I mean, if I, if I understand your question correctly, you are saying that, how do you attract CDMO customers when you have GPL as your parent company, which is also into a pharma space and might be competing with the customers, right? I mean, see the one is the product portfolios will be very different than the product portfolio that we, that Glenmark has. It is completely diverse. There is no overlap that we see between these product portfolios. That way, it is completely protected. Plus, CDMO project comes with its own IP protection for the customer, where the IP is transferred to the customer also at a particular point of time. They are anyways secure from that perspective. We haven't come across, such kind of concerns from our customers in the past, at any time, I think. That's how we... Yeah. Yeah. No. There are two different companies, right? I mean, we are working with Glenmark Pharmaceuticals at an arm's length, so we would not compromise any customer for the sake of Glenmark. We would not do that. Why would we do that? It would hurt our image. It would spoil our business, right? Okay. Okay. Okay, sir. Understand, sir. sir, many regulation customers talking about high, I mean, general high inventory built up in the system. Are you facing something from the customer or any particular region building up an inventory level? Inventory built up at the customer level, we haven't come across such kind of challenges. Except what you saw in some, in the CDMO space, we saw that, destocking of some inventory happening at our customer level, but not in our general API space. Okay. Okay, sir. Sir, last question from my side. There are some articles saying companies globally facing some problem to sourcing APIs from Indian pharma companies, Indian API manufacturers. Again, you're confusing Glenmark Pharmaceuticals with Glenmark Life Sciences. We don't source API to begin with. We make API, no? Yeah. I mean, the API companies which manufacture in India, global companies are facing some quality issues. No, no, that's generic. That's a very generic question. I don't think it would apply. I mean, it's not specific to Glenmark Life Sciences. Yeah, sure. I think you take the next question. Right. Sure. Sure. Thank you. Thank you. Ladies and gentlemen, for the paucity of time, that would be our last question for today. On behalf of Glenmark Life Sciences Limited, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines.