Ladies and gentlemen, good day, and welcome to Glenmark Life Sciences Limited Q4 FY24 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Soumi Rao, General Manager, Corporate Communications and CSR. Thank you, and over to you, ma'am. Thank you, Neeraj. Good evening, everyone. I welcome you all to the earnings call of Glenmark Life Sciences Limited for the quarter ended March 31, 2024. From Glenmark Life Sciences, today we have with us Dr. Yasir Rawjee, our Managing Director and CEO. Our board has approved the results for the quarter ended March 31, 2024. We 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 current expectations, forecasts and assumptions that are subject to risks, which could actually cause 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, Doctor. Thank you, Soumi. Good evening to everyone, and welcome to our Q4 and FY 2024 earnings call. Financially, 2024 marked a significant milestone for the company's history in many ways. I'm pleased to announce the completion of our deal with Nirma Limited, who we warmly welcome as our new promoter. Today is our first earnings call following the closure of this transaction. So we've had broad discussions with Nirma, on the way forward, and while our current direction on business would continue, we are working on various new initiatives to drive our growth further, given the increased growth capital available with us. Further, the business with Glenmark Pharma has also been secured by entering into a master supply agreement for a period of five years, beginning first of April 2024. So before I go into the details of how we performed, let me share a brief overview of the economy and industry trends that had an impact on business across the economy continues to display remarkable resilience, maintaining steady growth, holding, and a decline in inflation. However, challenges remain, including the worsening geopolitical situation and supply chain disruptions on account of Red Sea. Within our industry, the demand has remained somewhat subdued overall in FY 2024, but the situation is improving, particularly in the regulated markets. On the other hand, the continued Red Sea crisis has significantly disrupted global supply chain, affecting the ROW and LATAM markets. The rerouting of shipping vessels not only has delayed shipments, but also inflated costs. This disruption extended to airfreight, where higher demand and limited capacity caused bottlenecks, subsequently delaying some of our shipments. Despite these delays, we continue to see a strong order book for the quarters to come, but remain cautious about potential ongoing impact. Additionally, our base of Q4 was high due to very high demand from GPL last year, which impacted overall growth for Q4. On a full year basis, we have clocked 5.6% growth. I would like to assure you that our demand outlook and order book remain very strong. Coming to our regional performance year-on-year, our regulated market business was predominantly driven by Europe and LATAM, while Japan continues to experience inventory restocking. Our GPL business de-grew quite significantly. That said, we are optimistic about recovery in the Japanese market, starting H2 FY 2025. Our CDMO segment has grown steadily, and as guided earlier, we expect the commercialization of our fourth product in the second half of FY 2025. Overall, FY 2024 was a breakthrough year for the company, despite geopolitical disruptions. Our gross margins continued to remain strong, and after a one-time bonus adjustment, our employee cost remains one of the most competitive in the industry. As indicated earlier, it will normalize from the upcoming quarter. In terms of our pipeline, we have been aggressively filing across the globe to match our growth aspirations. The total DMF and CEP filings have crossed 520 as of March 31st, with cardiovascular and CNS therapies seeing the highest filings to the tune of 244 in total. During the quarter, we added six new products to our pipeline, with four high-potency APIs and two synthetic small molecules. Coming to high-potency API pipeline, we now have 17 APIs with a total addressable market of $37 billion at the front end. We have already validated three products, while four products are in advanced stages of development. Additional capacities at Ankleshwar and Dahej will be operational from Q1 of FY 20 25. So in closing, we remain optimistic of the growth prospects for FY 2025. We are committed to delivering high quality, innovative solutions to our customers and enhanced value to our shareholders. With this, I now turn the floor to Mr. Shyam Agarwal, who is taking the place of Mr. Tushar Mistry, our CFO, who is not able to be here today due to some personal reasons. So Shyam, I hand over to you. Thank you, Doctor, Dr. Yasir. Hello, and good evening, everyone. I once again welcome you all to our Q4 and FY 2024 earnings call. Following Dr. Yasir's commentary, let me briefly take you through the key performance highlights for the quarter and full year ended 31st March 2022, after which we will open the floor for questions. Our revenue from operation for FY 2024 stood at INR 2,283 crores, a growth of 5.6%. For Q4 FY 2024, our revenues were at INR 537 crores. The revenue for the quarter was impacted due to the ongoing geopolitical issues, resulting in delayed flight availability for dispatches and also aligning to some extent with Nirma policies. The gross profit for FY 2024 was at INR 1,281 crores, a growth of 11.7%, whereas the gross margin was at 300 basis points and stood at 56.1% in FY 2024, versus 53.1% in FY 2023. Gross margins for the quarter were at 55.5%, which expanded 60 basis points year-on-year. The shift in the product mix and a slight decrease in benefits from the PLI scheme impacted our gross margins this quarter. Looking ahead, we anticipate an annual reduction in margins of 100-150 basis points due to the discontinuation of PLI scheme's benefits. EBITDA for FY 2024 stood at INR 686 crores, up 2.2% year-on-year, with EBITDA margins remaining steady at 30.1%. I would like to highlight that the adjusted EBITDA for FY 2024 was at INR 747 crores, after considering the one-time bonus and transaction cost of 37.5 crores and INR 3.2 crores respectively, which would have brought us to an EBITDA margin of 31.8%. EBITDA for the quarter was at INR 145 crores, with EBITDA margin at 26.9%. As highlighted in our last earnings calls, employee costs are higher due to one-time bonus linked to management's past performance. We anticipate this cost will return to normal levels starting from Q1 FY 2025. PAT for FY 2024 stood at 471 crores, with PAT margin of 20.6%. PAT for the quarter stood at 98 crores, with PAT margin coming at 18.3%. Overall, FY 2024 has seen steady growth despite the backdrop of uncertainties. Moving on to the segmental performance for FY 2024, generic API dropped a revenue of INR 2,042 crores, a growth of 7% year-on-year. Generic API revenues were at INR 485 crores for Q4 FY 2024, and was impacted owing to the Red Sea crisis and muted GPL business. Regions like Europe and LATAM contributed positively to this segment year-on-year. CDMO revenues grew by 2% year-on-year, at INR 143 crores for FY 2024, and have continued to show stable demand. Within our therapeutic mix, the CVS and CNS portfolios continued to drive growth. R&D expenditure for FY 2024 was at 75.3 crores 3.3% of sales, and INR 20.2 crores for the quarter, which was 3.8% of our quarterly sales. Let me quickly touch upon the balance sheet and the cash flow movement, starting with working capital. Working capital for FY 2024 was at 170 days, slightly on the higher side on account of high inventories we maintained due to current geopolitical issues. Our CapEx for FY 2024 was INR 129 crore. We continue to remain a net debt-free company. For FY 2024, we generated free cash flow of INR 285 crores, with cash and cash equivalent of INR 301 crores as of March 31, 2024. Overall, a promising demand environment with our strong order book, coupled with fresh capacities, puts us in a formidable position for growth in the coming quarters. With that, let us open 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 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 their question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from the line of Tarang from Old Bridge Capital. Please go ahead. Hi, good evening. Just three questions from my side. You know, you had guided in your Q3 earnings about, you know, a soft GPL business in Q4, but the volatility or the fall that we saw was quite steep. So just wanted to get a sense in terms of going forward, how should we see it? And are these quarterly... Can we expect these quarterly aberrations even from here on? So Tarang, the thing is, GPL business has been a bit, you know, cyclical because of their demand, you know, at the front end. My understanding in terms of why this has been soft, or you know, significantly soft, it was on account of some inventory destocking that they were engaged in. We expect them to come back in the year, but, quarter on quarter, we do expect some, you know, fair amount of variation, let's say. On a yearly basis, I think it's going to be fairly stable. Okay. And doctor, generally, from your vantage, what kind of visibility do you have on the business? Do you have a, say, six-month, two-quarter visibility? How does it really work? Typically, we should have about, you know, one to two quarters of visibility on this business, right? Okay, got it. And second, I mean, the CDMO business, I, I believe you spoke about the fourth molecule, which could probably commercialize in Q2 of FY 2025. Was it Q2 or Q4? It depends on regulatory approval. I mean, if it comes through soon, then we should expect something in Q2, but it could probably get into H2. Okay. Uh, so. Okay. But, I mean, you're roughly at about INR 140 crores in FY 2024. I understand the long-term plans are strong, but, more from a near-term perspective, how should we look at 25, 26 for this business? Yeah. So we should expect the fourth project to kick in sometime in H2. And even the fifth project, right, should kick in by Q4, is our expectation. Okay. You know, so there should certainly be some jump, you know, which we should see towards the end of this year. Okay. And, iron sucrose pipeline, I think three molecules were in active development. One was filed. Is that status quo, or has there been any change there? At status quo, one molecule has already been filed. It is being reviewed by regulators. And then, you know, we've got three molecules in the pipeline. Two are in advanced development, one has been recently taken in. Thank you. Sorry to interrupt you, Tarang. I'll request you to come back for a follow-up question. I request to all the participants, please restrict to two questions per participant, and kindly join the queue for a follow-up question. The next question is from the line of Subhankar Ojha from SKS Capital and Research. Please go ahead. Yes, hi. Thanks for the opportunity. Can you please elaborate on the master agreement that you have signed with GPL? I mean, what is the structure, et cetera, like, and I mean, basically more color on the same. Sure. So, I mean, it's a five-year agreement, right? And, basically, existing supplies would continue, and new products that have been filed with our APIs. Okay, and these, of course, would happen at competitive prices. Therefore, you know, protecting the interests of both the parties by ensuring that, you know, there's a predictability on supplies as well as on earnings. Okay, great. And what was your GPL revenue in the overall revenue for 2024? It was around seven months, about 30%. About 30%? INR 717 crores. You expect this to be stable, going forward? Yeah, we expect it to grow in the high single digits. High single digits. Okay. All right. All right. Thank you so much. Sure. Sorry, okay. So one more, actually. So also with respect to the CapEx, we have done a major CapEx for the shed in Ankleshwar, which is going to start operation, 2025, quarter one. Is that what you said? Yes. What is our CapEx budget for 2025? So 2025, it would be around INR 340 crores, because we are starting Solapur in a big way now. We expect to spend about INR 140 crores for the greenfield site in Solapur this year. And the remaining would be for, you know, completing many of the brownfield projects that we have undertaken in Ankleshwar and Dahej. And then, of course, there is regular maintenance CapEx and R&D and quality and so on. All right. Great. Great, and good luck, sir. Thank you. Thank you. Thank you. I request to all the participants, please restrict to two questions per participant. Next question is from the line of Neha Manpuria from Bank of America. Please go ahead. Yeah, hi. Thanks for taking my question. Dr. Yasir, you mentioned quite a bit about how the quarter- May I request you to speak a little louder, please? Is this better now? Yes, thank you. Okay. Dr. Yasir, you mentioned quite a bit about how the Red Sea crisis impacted our ROW Latin supplies in the quarter, and it seemed like you also remained cautious on this, you know, on this scenario going forward. Could you give some color on what could have been the likely impact because of these deferment or delayed supplies in the quarter? And are we seeing some easing in the situation or some workaround this to ensure there are no further delays? You know, anything that you can give us color on? Sure. So what we did not anticipate in last quarter when the problem had just started, right, and in the last quarter commentary, right, is that we didn't expect that the air routes would fill up a lot. There'd be a higher demand on the air routes, and that is exactly what has hit us. So, you know, there's a backlog, right, because of the higher demand on the air routes, right? Of around 10-12 days. And as a result of that, you know, we had a problem, right? With completing our entire sales for, you know, some of the destinations, and that has hit us. Now, in terms of a workaround, you know, obviously, you know, we'll have to, we'll have to try and sort of anticipate, you know, getting earlier bookings and so on, and try to mitigate. But I expect that until this crisis, you know, ends, and the sea routes are back, air freights, air freight, availability will continue to be a challenge, plus there would also be some impact on the air freight costs, you know, going forward. So let's see how it pans out. The other impact is also on the raw material supply, because that we get by sea. Hmm. One out of three vessels is actually hitting the western seaports in India. We are trying to do a workaround there by trying to see if we can get better availability of, you know, on the east, on the eastern, like Visakhapatnam and Chennai. Hmm. Right? To try and see if we can do something there. And then, of course, we'll have to add a bit of road transport there to get our materials in time, because if we don't do that, then there could be some impact also on holding a little bit extra inventory going forward. Sir, sir, is there a risk to the, you know, usually mid-teen guidance, revenue guidance that we have talked about, you know, because of this, the crisis ongoing? Does, does that mean that shipments will be... unless this is sorted out and we have very little visibility on that at the moment, you know, we could see lower, supplies and therefore lower revenue? Neha, see, demand is pretty stable, okay, across the market, except the Japan thing that I had mentioned earlier, right? So demand is there. Now, it's our job to ensure that, you know, given the situation, how do we sort of adjust, okay? I am hopeful that, you know, that we'll be able to figure out both the supply side as well as the, you know, sales side, you know, the shipments happen in time so that we are able to recognize the sales. Thank you. Sorry to interrupt you, Neha. I request you to come back for a follow-up question. I request to all the participants, please join the queue again for a follow-up question. The next question is from the line of Ahmed from Unifi Capital. Please go ahead. Doctor, so we want to understand the external business system- Ahmed, sorry to interrupt you. Can you please speak through the handset? Yeah, yeah. So, we have a question on the external business. So two questions here. First, can you, in the 5% degrowth which we had this quarter, what is the breakup of volume and the price? How is the volumes done, and how much is the price decline Y-o-Y? And number two, can you give a little more sense on the geography-wise revenue, for the external business? How is each geography done this quarter? So, Ahmed, the dip in the external business, right, like we said, was largely on account of this Red Sea business, plus, you know, some alignment with the Nirma accounting policies. Okay. With respect to, you know, volume versus price, see, typically, on a year basis, we do see an erosion of around 4%-4.5% on the bucket, right? So, you know, and so there is something to maintain growth. We do have a volume growth of around 10% -11%. So I mean, that's where I would put that. Okay. Coming to geography mix, on the quarter, like we said, Europe and Latin have performed well. The other regions have been relatively flat. Japan has not done well. Okay, but on the year basis, every region except Japan has hit really well. I mean, India did very well, right? The U.S. also did well, for the year. Okay, Europe, Latin has also done well, and ROW has done, has grown, but not but in single digits, right? And the only degrowth that we have seen is on the, the Japan side. Okay, thank you. Second question was on the last year. Actually, we had a very strong business, both from the GPL as well as the external business. And looking at the circumstances in the next couple of quarters, do you see some more weakness in the business for next two quarters? No. We, we have a pretty good order book on the external side, and we expect GPL, GPL also to kick back in, right? So, we expect the first half of this year to be to have a pretty good growth. Thank you. Ahmed, I'll request you to come back for a follow-up question.... The next question is from the line of Ashwini Agarwal from the Demeter Advisors. Please go ahead. Good afternoon, doctor, and congratulations on completing the transaction. In your opening remarks, you said that you're working on various new initiatives, discussing various new growth initiatives with Nirma, and with more growth capital agreement, with more growth capital available to you. Could you talk a little bit more about that? What areas this might be, and when do you start to see the CapEx plans getting outlined, and you know, visibility more on this front? Sure. So Ashwini, basically, like I said, right, the, the existing description that we have adopted for ourselves for growth would continue unimpeded, unhindered. That is a pretty solid plan. We will continue that. With respect to, you know, what we can do further, I mean, certainly we will be pushing harder on the CDMO side, okay, with respect to opening up more channels, okay, with respect to the business side. And, as far as, you know, the technology side, there are a few technologies that could open up, you know, other portfolio opportunities for us, higher value portfolio opportunities. And those are technologies that, we, will start investing this year itself, okay, which should sort of start panning out at a commercial level in 2-3 years' time. So we have lined up a couple of them already, and we would be building those out in R&D. There would be a few more levers that we would add on the technology side. On the business side, it would be, you know, sort of more extended CDMO play with technologies coming in to assist both the API growth as well as the CDMO. Okay. And just coming to the near term, which is the next one or two years, you alluded to two factors that hindered Q4. One was, of course, the Red Sea and the air freight capacity issues, and the second was alignment with Nirma policies. Could you spell out what the latter means, the alignment to Nirma policies, and how much of revenue got deferred or could not be recognized because of that? Yeah. So in total, it was around INR 45 crores. Okay. We'd have to come back to you on the split. But, yeah, I mean, as far as, I mean, there's, there's got to be a consolidation now with Nirma, right? You know. So we had to make some small adjustments there, right, in order to align. Okay. And what would be the outlook for fiscal 2025? I mean, should... You mentioned 10%-11% volume growth with 4%-4.5% price erosion, but then there are these new CDMO molecules coming in. So I'm wondering, you know, what I'm at, is it mid-teen or 18, or single-digit revenue growth? And on EBITDA, the initial comments suggested a 100-150 basis point hit on account of PLI. So net of that, how would you like us to think about profit margins opportunity? Yeah. So on top line, we are holding low- to mid-teens growth, Ashwini, right? Like I said, right, GPL would give us high single-digit, right? And then our external business is looking robust, so that would continue. Japan would bounce back also, right? And so as far as EBITDA goes, right, yes, there would be an impact of PLI, right? And so we can probably hold, you know, around 28%-30% range for the EBITDA. Thank you. Ashwini, I'll request you to come back for a follow-up question. Thank you. Next question is from the line of Nitesh Dutt from Burman Capital Management. Please go ahead. Hi. Thanks for taking my question, sir. Nitesh, may I request you to speak little louder, please? Is this better? Still sounding little distant. Can you speak through the handset? Sure. So my question is around the PLI that you just answered, Dr. Yasir. When will the impact start on our PNL? Oh, right away, because we disengaged with Glenmark, you know, as of March 6, 2024. So I mean, we, we will not be accruing any PLI income from first quarter itself. Understood. Second question is, regarding our capacity expansion in FY 2025, right? So we will be adding another 800 KL. I just want to understand this breakup between internal consumption in intermediates and for final APIs, this 800 KL additional capacity. And also, what is our current capacity utilization level, blended at blended level, if you can give the number? Nitesh, I don't know where you're getting 800 from, huh, but, two hundred and eight will get added in, plant eighteen in Ankleshwar, right? And then we are adding around 35 KL, in the pharma area four of plant six in Dahej. So, that will, that will be around two fifty-ish KL, right? If you're referring to Solapur first phase, that will not be operational in FY 2025. That will be operational in FY 2026, and that also towards the latter end. Okay? So I just want to sort of align there, right? What was the second part that you asked related to capacity? I was asking about utilization, utilization level. Utilization. Yeah, so, so the thing is that, we expect utilization to start off on the new capacity at around 60-65%. Okay? And then, yeah, I mean, you know, in FY 2025, and then it would jump, right, in FY 2026. Got it. So finally, from Nirma's perspective, I just wanted to understand their strategy regarding the business. If anything has become clearer regarding how they want to take this forward, right? Considering they have other pharma businesses also. So, any potential change in business model, et cetera. You mentioned about additional growth capital, but other than that, anything from Nirma's side, if you're able to share at the moment. My understanding is Nirma's other pharma businesses would continue to run independently of us, right? They are largely India-based businesses, is what I understand, right? So the overlap with us is hardly there, right? We, our strategies would be driven purely by CDMO and API, okay? And even the technologies that I mentioned, right, would be driven by us, would basically center around API and CDMO. So there is no, no clearly, clearly there is no plan to sort of merge any of the existing Nirma business or pharma businesses with, you know, the API, the GLS API business. Thank you. Nitish, I'll ask to come back for a follow-up question. Next question is from the line of Sajal Kapoor, individual investor. Please go ahead. Yeah, hi. Thanks, and good afternoon, Dr. Yasir. As the CDMO projects and relationships scale, Dr. Yasir, the impact of success as well as the impact of failure will increase, right? So in that context, management bandwidth, senior scientific talent, along with, you know, systems and controls that may be working at small scale, where we are today, and may not be fit for purpose as we fight competition and scale up our CDMO services. So basically my question is, how are we geared up for future? Because if I see at the Indian landscape, there are tons of companies in the 100-200 annual CDMO kind of revenues in India today, and not everyone will be successful. I think majority of these companies will just stop doing CDMO services because they will struggle to scale up. So how are we positioned? Because we have the balance sheet to support growth, but do we have the intent and the strategy in place? Thank you. Okay, thank you. So, if you were following the answer to Ashwini, that I just gave a few minutes ago, right? So let me take you to where we are on CDMO now, okay? So our focus on CDMO thus far has been on life cycle management, right, of in end of life cycle, plus specialty. Now, with respect to attrition in that space, the attrition is not that high. So, typically our strike rate, you know, on landing projects is about 40%-50%. Okay? So currently, we've got a pretty healthy, you know, set of RFIs, you know, getting into RFQs and then later into project realization, right? And we expect that that 40%-50% attrition is all that we will be hit with, right? The bandwidth also, that we require to close these projects and make them successful, is available to us now. But then going back to, you know, the question that Ashwini asked in terms of what are the further investments, I mentioned that we would be opening up some more channels, you know, with some further investment. Now, that may require, you know, investments both at the front end as well as, and definitely at the technology end. But that would be an additional, lever, so to speak, on the CDMO side. Okay? So while this push on CDMO is something the, the one with specialty and end of life cycle, is part of our current strategy, and that would continue with a, with a fairly modest attrition, right? And with the bandwidth available for us to deliver, okay? We believe that, you know, by further opening up channels, we will only accelerate our CDMO play. Of course, I mean, you know, you do reference other companies. I think everything relates to how a company approaches CDMO and basically what slice of the CDMO piece are people looking at. So if you're in the early medicinal chemistry, you know, lab type of projects, yeah, you have a larger number of projects, but like you mentioned yourself, the attrition can be pretty high. So again, we are clear, right? Attrition in our set of products is, projects is, pretty modest, and, we expect a fairly, good hit rate, you know, with respect to CDMO space. So, do we have the expectation to hit a number close to INR 1,000 crore coming from corporate synthesis or CDMO? I mean, is that what our vision or strategy is over the medium term, to try and get closer to that number? Because INR 100 crore, INR 200 crore, I think, is subscale, and it would be difficult to survive for any player at that level for very long. Standalone, I think- Yeah, yeah. On a standalone basis, yes. What you're saying makes a lot of sense, but you've got to factor in that our INR 150 crore revenue is driven by only three projects. Okay? So they are sizable. At a per project level, they are sizable. So for us to add, let's say, you know, another eight to 10 projects in the next four years would drive up our revenue to about INR 500-600 crores, is what we had indicated anyway, right? So that direction is clear. The size of our portfolio allows us to, you know, say that with confidence, right, that we will achieve that. However, right, you know, adding another lever or a column, so to speak, on the CDMO, which we will choose carefully, again, keeping in mind that we don't want to get into this very high attrition business. Plus, you know, we don't want to be making very significant investments in a completely different set of, you know, capabilities and technologies. We, we should, we should, you know, aim for INR 1,000 crores. I'm not putting out anything. I mean, but just to. Since you put that number out there, if we add a little more, you know, more levers on the CDMO side, we, we can aspire, we can aspire for INR 1,000 crores. Thank you very much. Sajal sorry to interrupt you. Kindly come back in the question queue for the follow-up question. A request to all the participants, as we have a long question queue and the management is able to answer all the participants in the queue, kindly restrict to two questions per participant. Next question is from the line of Aejas Lakhani from Unifi Capital. Please go ahead. Thank you. So a follow-up on some of the earlier discussion on freight. Should we assume that, although there are challenges given the limitations on air freight availability, but the fact that you have awareness of the problem and options that you're exploring across different lines and different modes, what probability should we ascribe to that being a constraint to actually getting it done? So, Aejas, thanks for the question. Well, I think it remains to be seen. We'll have to figure this out. It doesn't look like a showstopper for sure, okay? I mean, it will add to some cost, and even that cost would be very minimal. Okay, but the more important issue is timing, okay? So let me break it up again, right? On the raw material side, right, like I said, all our raw materials come to the western coast, the Gujarat or, you know, Mumbai. Okay, if that begins to be a challenge, right, going forward, then it will only mean that we will, we will stock up some inventory. You know, maybe an extra 10-15 days on the inventory side, okay? Which will impact working capital. I think that's easily manageable because our supply base is largely from China and India. Some European suppliers will have to figure out how we manage those, but again, not a challenge, right? Where I, I think we need to do a bit of work, is try to figure out in terms of, you know, how we, we continue to get the full benefit of our, you know, three-month manufacturing cycle, right? And translate that to basically making sure that the customers get the material, you know, in time, and we can recognize the sales. So that, that part we'll, we'll have to figure out. The good thing for us is that our business is pretty distributed across the world. All it means for us is in certain challenging regions, we would have to basically prioritize manufacturing for those regions, right? And therefore, recognize the, you know, be able to recognize the sales comfortably. But it takes some adjustment. We're working on it. Okay. There was also a discussion, but I'm just asking the same to try and understand whether I got it clearly. The question was on Nirma's influence on the company's business plans. Did I understand you saying effectively that what Nirma has going on is largely domestic, and that will be continued by them independently, and effectively, what you have in mind and what you've been explaining to shareholders as your business plan has little or no change with the new promoter coming in? Is that a fair understanding? Yes, it's a complete... It's a fair understanding. You're spot on. Okay. Thank you. Best wishes. Thank you. Thank you. The next question is from the line of Punit Pujara from Helios Capital Management. Please go ahead. ... Yeah, thanks for taking my question. I hope I'm audible. Yes. Yeah. So if I look at the future capacity expansion plan size slide that you put out, and if I look at that for Q3 presentation, we are expecting to add 258 KL of capacity in FY 2024. I understand that much of it will be commercialized in 1Q of FY 2025, which is, I'm pretty sure, getting 208 KL out of that. But still remaining some 590 odd KL will be adding as per the current slide in the future capacity expansion plan. So could you just provide some color where these capacities are getting added? Sure. So largely, the bulk of this 500 odd KL will be coming up at Solapur. And like I said earlier, this will be coming up in late FY 2026. There would be some additional capacity that we may look at in Dahej on the pharma area, right? In case we run into some bottleneck, because that civil construction is already done. Okay? But that we'll see how that pans out. And then there is the sort of completion of plant six in Dahej, that should also give us an additional 120 KL of capacity. But again, I expect that that would come online only in mid-2026. But see, our strategy has always been to be calibrated on our capacity expansion. So while, you know, we do the early work, like civil construction and stuff, which adds a lot of, which takes up a lot of time, we do that quickly, you know, with very little investment, right? The bigger part of, you know, the investment, which is the fit out and the, the whole, you know, HVAC, the air handling systems and all that, right? And that takes less time. We do that closer to when we see that we need that capacity. So that's the plan. We'll see how it goes, right? I'm not saying that we will bring everything online, you know, at the same time, we'll go step by step. This 250-ish KL will come in Q1 of FY 2025. And, you know, the rest will, you know, we'll chug along. Right. These are not, like, very hard numbers. These are depending on certain business development visibility, certain decisions to be taken up by the management. These are not, like, hard guidance numbers. Is that right way to think? Yes, yes, exactly, because the thing is that, see, again, if the business is there, it will come on, and we can bring it on, you know, in about five to six months, right? But, you know, if we don't need the capacity and we can service the business, you know, with the existing capacity, then why spend the money? Fair enough. Yeah, thanks. That answers my question. Sure. Thank you. The next question is from the line of Dhruv, from Florintree Advisors. Please go ahead. Hello. Am I audible? Yeah. Yes, you are. Okay. So I just wanted to ask you that, in the presentation that was being provided, I could see that the Solapur, has there been any plant capacity decrease in Solapur and Dahej from 1,000 to 600 KL and 220 to 100 KL, respectively? Okay, Dhruv, Dahej 220 KL is now broken up, right? So we're adding 35 now, right? We may end up adding another 35 this year on the pharma area, right? And then, like I said, around 120 KL could come up. So that gets us to that 220 number that you're referring to, right? Okay. Mm-hmm. And Solapur is something that, you know, we will do in two phases. The first phase should come through by FY 2026, and okay, which will basically allow us to take validation batches to go for, you know, trigger an inspection. Okay? And then we'll see how that builds out, whether we need, you know, 400 or more capacity. It's something that will depend on the product mix, right? And what we are planning to build up in Solapur. So just to go to the previous, you know, Mr. Punit Pujar a's question, right, we basically are going to play it by ear. Okay. And my second question comes from, like, so the one-time bonus impact of employee expenses, can you share some, just throw some light on that and the future trajectory for the same? Yeah. So on the one-time bonuses, the company has been performing very consistently over the last few years, right? And there was a plan to sort of, you know, award these bonuses to the top management, which was done in the last year. Now, that is not something that would continue, so our manpower cost would regularize in FY 2025, back to more normal levels, right? That's the, that's how it would be going forward. Okay. Thank you, sir. Thank you. The next question is from the line of Siddhant Singh from Green Portfolio PMS. Please go ahead. Hello, sir. I have a couple of questions. Sir, first, I just want to touch back on the Red Sea crisis issue- ... Your voice is coming very distorted. Can you please speak through the handset? Hello? Yeah, sir, I just want to touch back on the Red Sea crisis issue. Sir, could you share your insight on the expected trajectory of freight cost in Q1 FY25? Will they remain elevated, or are there potential factors that could lead to a decrease in the cost? What do you think, sir? So look, costs have gone up, both sea freight as well as air freight, okay? Air freight is a blowback because of sea freight, unavailability, right, and the timing problem. So both have gone up. Luckily for us, our volumes are not that, that high, so even with the higher rates, right, there will be some impact also. I mean, you know, if it continues over the year, you know, maybe INR 10-INR 12 crores impact if it doubles, the sea freight, rate, the freight rates. Okay, but, I don't expect that this crisis will continue for a year. So overall, when you sort of dial in both, maybe let's say another three months of this matter is sorted out, then things should come back to normal. Okay. Okay, and my second question is regard to your R&D pipeline, sir. Are there any specific upcoming filings or approvals you would like to highlight, and also about their impact on your future revenue stream? So our high-potency pipeline is building up very nicely, right? We've got around 16 molecules now, right, that we've taken into the pipeline. Okay. With respect to revenue coming from this, we already will get one product commercialized in some select markets, right? Which is really nice, because we didn't expect that, but it has already begun. But the large part of the revenue build up on this high-potency pipeline would start about two years from now. So there would be a significant addition in about two years' time on account of this high-potency pipeline. Thank you. Siddhant, I'll request you to come back for a follow-up question. My next question is from the line of Tarang from Old Bridge. Please go ahead. Hi, Doctor. Just on the Red Sea impact, just wanted to check, I mean, did the impact, you know, have a bearing on your sales target, or it was really a cost push? Number one. Number two, if it did impact your sales, are we looking at deferral, or are we looking at permanent loss? And number three, if it is a loss, I mean, strategically, does it hurt you in terms of really losing market share with your end customer for not being able to supply material? So, Tarang, see, right, it, it's a sales loss, right? It's a deferral really, and, you know, it, it's going into the next quarter. Okay, and but we didn't anticipate that air freight would have such a big backlog. Okay, it's the air freight backlog that has caused this deferral on the sales. That's the thing. And as far as customers go, I mean, if there is a delay of 10, 12 days, the customer really doesn't get impacted, right? But we have cutoff dates, and we have to recognize the sales, you know, in the quarter, so that has obviously hit us, right? Got it. And frankly, it did take us by surprise, but the manufacturing schedules were already in place. So while we were trying to do our best to sort of get it in quickly, right, it is what it is, right? I mean, it kind of hit us there, you know? Sure. Sure. And I mean, in terms of cost implications, you did sound out a INR 10 crores-INR 12 crores number for the year, so- That is, if it continues for an entire year, it can double. Okay. Yeah. Sure. Okay. Soumi, thank you. Thank you, Doctor. Sure. Sure. Thank you. The next follow-up question is from the line of Ahmed from Unifi Capital. Please go ahead. Just want to reconfirm a number. You said 45 crores impact because of deferment and a change in accounting policy. Is that correct? Yeah. Can you break it down, deferment and change in policy? Like I said, we'll have to come back on that. Okay, fine. Thank you. Thank you. The next follow-up question is from the line of Punit Pujara from Helios Capital. Please go ahead. Yeah, thanks for the follow-up. Now that the year is closed, could you tell us that what percentage of your revenue came from goods that were made using inputs from, like, imported goods at any stage? That's one. And follow-up to that would be, what percentage of inputs came from China for that? Could you please repeat that? I kind of lost you. Yeah, yeah, sure. So what I'm asking, what percentage of your financial year 2024 revenue came from the goods that were manufactured using the materials imported outside In- from outside India, and within that, what was China's share? Okay. So you know what? Tying up what gets made because of China and what gets made because of other imports is difficult, because there are all kinds of inputs that go into a single product. Hmm. Looking at a seven-stage synthesis, right? There are multiple key starting materials and common raw materials that come from China, India, Europe, so that's difficult to quantify. But let me tell you, right, our import procurement, right, is about 40%-45%, right? And China is about about 48%, right? And the rest of it comes from India. This is expected to come down with backward integration capacity, such as Ankleshwar coming up? Sure enough, yes. It's expected to come down. Sure. And the second thing is, you mentioned to my earlier question that you can put up capacities in, let's say, roughly six months of time upon getting business visibility. But given that the Red Sea crisis is also would impact the inbound shipment as well, so what, like, how will that ensure the import of machineries or engineers coming to set up those plants? How will that, how will that timeline change? Okay, so for CapEx, for capacity building, we don't get outside, everything is done out of India. So all our suppliers are based out of India. Our entire infrastructure, there is no infrastructure development dependence on, any foreign country. Everything is indigenous. Okay, so that's not a problem. I see. Sure, that answers my question, I'll fall back into. Thanks. Thank you. Next question is from the line of Dheeresh from WhiteOak Capital Management. Please go ahead. Thank you. I have two questions. I just want to confirm the Glenmark business, API business, will grow high single digits. Your voice is a little muffled. Hello, is it better now? A little bit. Okay. So two questions. First, I just want to confirm my understanding that what you said is that Glenmark business for the full year will grow in high single digits based on your current outlook from the FY 2024 base, right? Yes. Okay. And second, I just want to understand the accounting policy that you reconciled. What was the policy earlier and what is the policy now? Yeah, so I mean, Nirma follows a certain pattern, right? So we have aligned completely with that pattern, right? We'll have to give you details, not in this call, right? Okay. We'll take it, take it later. Thank you. Related to the consolidation. Yeah, I want to understand the policy change, because Glenmark also, being a large company, I expected the policies to be best in class. So what, you know, is there a change in the way you record, report, record revenues, revenue recognition policies really different? Yeah, so like I said, we'll have to come back to you, Dheeresh, on that. Hmm, okay. Thank you very much. Ladies and gentlemen, we will take that as the last question. On behalf of Glenmark Life Sciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.