Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir. Good day, everyone, and thank you for joining us on this call to discuss the Q3 and nine months full year 2022 earnings for Suven Pharmaceutical. We have with us Mr. Venkateswarlu Jasti, the Managing Director, and Mr. Venkatraman Sunder, Vice President, Corporate Affairs. Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company's performance have been mailed to you earlier. I now request Mr. Jasti to share his perspectives on the performance and outlook. Over to you, sir. Joining this earnings call. As you could see, I think we have done better than the last quarter, and in spite of the increased costs on the goods, logistic costs and all that stuff, but still we could manage to maintain even the profitability also. I think I can answer all questions on that eventually rather than telling which is already on the papers. Other thing which I want to update you is, as you know, we are 25% holding in Rising Pharmaceuticals in USA, which we have divested in December to H.I.G.-led partner with a $45 billion company, which has taken the full stake of Rising Pharma from all the stakeholders. They are 60% now, and we have residuals after getting a fresh cash of 40- 45. $40.5 million plus $50 million worth of shares are allotted in the new company, which is equivalent to 7% of the value on that. That has been done in December itself. That I want to update you on that part of it. Then I think things are moving well. As you know, we may not have the crystal ball for the whole year, but as of now for the next six months it looks good. Run rate will be closer to the same thing as of Q3. We hope also to maintain the profitability also. But at the same time, there are some caveats like unavailability of raw materials which can derail our progress. That's only about something in addition to the increase in the raw material cost, which is okay, which we can take some heat on that. Unavailability itself will derail some of the progress we think we will have. With this, I think I'll stop at this, and I'll wait for the questions to be answered. We should begin the Q&A session. Yes. Okay, sir. Thank you. Ladies and gentlemen, 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 handset while asking questions. Ladies and gentlemen, we will wait for a moment while question queue assembles. To ask a question, please press star and one. The first question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Yeah. Hi, Mr. Jasti. Congratulations on a very good set of numbers. First, I want to understand a few things on this strategic M&A that you have been taking r ight? In 2019, when we acquired Rising Pharma, I believe the Casper Pharma, which is what we have mentioned in our that we are looking to buy a formulation facility from them. Casper Pharma was a buyer in that transaction, right? In the recent H.I.G buyout, I believe they have bought Casper Pharma along with Rising Pharma to make a combined entity in which we have 7% stake. This Casper Pharma, I believe, is somehow related or is the same company to Cronus Pharma, which is what Aurobindo Pharma was trying to buy last year, which they terminated, which is into animal health products. Can you help me understand the bigger picture of what we are trying to accomplish over here? Yes. As you rightly said, the H.I.G. partners has bought both the Rising Pharma and Casper Pharma businesses. As I said, we are also 7% in the residual partner of the new company. This Indian Casper Pharma India is not part of the deal. During the discussions, H.I.G. said, "Since I'm a minority partner and since I'm in India, it is better instead of we running the business," I mean, because it's not being a part of it. It is people from Vimal Kumar and all these people, they are having this stake in this one t hey said that, "It is better you take it over and run it." Because Casper Pharma existing contract with Rising Pharma to do all the products that are developed in the Rising Pharma R&D in the manufacture and supply on a profit share basis to Rising Pharma i t's a long-term contract is existing. What we are based on that now we have taken our board permission to take the I mean in-principle approval. Now we are handing it over to the legal and financial diligence to arrive at the costing. Because this facility is in SEZ in Hyderabad Airport, and it is in a 30-acre site, and it is already filed 6 ANDAs, and waiting for the FDA approval. All the other products that are under development at the Rising R&D will be exclusively manufactured by Casper Pharma and supplied to the Rising on a profit shar e basis. That is the rationale where we are really interested in it, and it is being a minority partner there, it is a benefit there also. They want a sustainable and predictable people to run this place on a commitment basis. That's why we are evaluating this. If the price is good and, I mean, evaluations are good, then only we'll go forward on that. That's why we have addressed this to a Big Four firm for the financial due diligence and a legal firm also. This is the status. Okay, sir, I believe this plant has three lines. One is the general injectable, one is the special injectable, and there's another oral drugs w e are acquiring all this, the entire facility with all the three lines or we're acquiring just the oral drugs formulation part? This Casper Pharma is only as of now built for INR 1.2 billion capacity for solid oral dose forms like capsules and tablets. It has a plan to do in the future the liquids also work, but no injectables. No injectable. Okay. Okay. Sir, another thing, like in the last phase of our CapEx, we had built a formulation facility for the formulation business that we are trying to scale up, right? Till now, we haven't really scaled up that business well. What's the rationale of acquiring another formulation facility? Can't we do this business from the same facility that we have? No, our expansion does not. I mean, the projects which we have in hand, which are going to mature soon. To take all these new projects, it will not be sufficient. Also this is an existing facility coming with a large number of products and long-term contracts, unlike where we are building and looking for a maturity of the product or a partner and all that stuff, right? That's the difference h ere is a long-term contract ready to go into operations and the future potential with the new R&D projects arising out of the R&D exclusively manufactured here. All these things are the rationale where we have been working on. Right. The contract of this business would be dilutive to our existing business model? Which one, sir? The new long-term contract that we'll have based on Casper Pharma, will this be dilutive in terms of margins profile? Oh, yes. I mean, the formulations, whatever the, what do you call, the tech transfer projects or whatever the normal, the profit-sharing basis which is there, it will be the same thing it 's already existing contract, which we are doing, I mean, which we have seen it and what we are now giving it for the diligence, and based on that we'll go. Right. Okay, I have few more questions. I'll just get back in the queue. Thank you. Thank you. Reminder to the participants, please restrict your questions to three per participant. Time permitting, you may return to the queue for your follow-up questions. Our next question is from Adar Poonawalla from [Unintelligible]. Please go ahead. Yeah. Sir, congrats on good set of numbers. Just the first question, follow up on what the previous participant was asking. You said they have filed 6 ANDAs, and none of them are commercialized. I mean, are we just looking for the plant or you know, what could be the sales opportunity in terms of what is currently being filed and what is under development? As I said, it's none of them are, I mean, approved since because the FDA inspection has not taken place t his is a brand-new facility. We are evaluating all those aspects, but it is the long-term prospects are what we are looking for here. Only after the FDA inspection only then this will go into the commercial opportunity, isn't it? That's what the rationale and that process. What my question is basically on the ANDAs which they would have filed. What would be the branded sales of the product what they filed generic in the U.S.? We just have taken an in-principle approval w e have not gone through the things t he diligence is going on. Then things will come out, and based on that we'll be able to know, and based on that, more or less it is an asset value only we are going to pay. That's what it is, not the business b ecause business will take time to come in because the FDA has to come and then the approval has to come and all those things. So it is the asset value and what we get out of it is, it's a ready-to-go plant, FDA-approved plant with existing people, with existing contracts, and you don't have to start all over again b ecause our facility which we have created in Pashamylaram takes care of only INR 300 to 400 million only, but not the INR 1.2 billion. That's one thing. These new products that are coming in, future products that are coming with long-term existing contracts, these are the things that interested us, that's why we are going ahead. Finally, we are going to pay for the asset only, not for the business t here is no business as of today. I want to make it clear. Got it, sir. Got it. Also just one more on, I mean, on the CapEx, INR 600 crore CapEx plan, what we had announced in the earlier quarters, does that remain intact or, because we are doing some expansion at Pashamylaram. Are we, you know, still going ahead with that expansion if we acquire this facility? or, that plan so largely remains intact? No, that expansion is over n o, that plan is over. The 600 CapEx is for the new things. One for the, I mean, Suryapet replacement block, R&D, relocation, and one additional block in Pashamylaram, which we have not started yet w e'll be starting soon. My question was with regards to that one new block only. If we are doing this or, you know, pursuing this acquisition, do we still have to expand the Pashamylaram block? Oh, yeah. I think you have a misunderstanding w hat we are acquiring is a formulation facility. What we are saying in Pashamylaram is a CRAMS site of the block, I mean, intermediate block. That's different and this is different. That will continue. The CapEx which you have earmarked is there. It will continue. The new opportunity that has come because of this divestiture and because they want to divest this Indian operations to people who can run it and restart it. It is partly the right thing. We are taking 100% of the thing. No partner will be there. It's an asset-based purchase it will be there. Okay. Got it. Just final question, sir, on the CDMO Pharma revenues for the quarter, you know, you posted close to INR 266 crore on the top line. Just wanted to understand or have some color as to what led to this kind of a top line. You know, I mean, you mentioned that you have a six months visibility, but if you could just throw some further, you know, some more color on this revenue what we've achieved in this quarter. Yeah. I mean, there is one new commercialization that has happened, and also the traction on the other products are also good in the both commercial and the basic CRAMS also. As I was telling in my earlier comment, things are moving in the same direction maybe for the next six months also. Things are better now. Okay. Got it. Sir, how many molecules would we have under Phase III now? We have five in the chemical and five in the basic. Got it. Got it. Got it. All right, sir. Thank you so much for answering my questions. Thanks. Thank you. Next question is from the line of Ritesh Shah from Kotak. Please go ahead...... Ritesh Shah, your line is unmuted. Please go ahead with the question. Looks like Ritesh Shah is not there. As this is the line of the current participant, we'll move to the next participant. That's Saravanan from Unifi Capital. Please go ahead. Yeah. Thanks for taking my question. Congrats on a good set of results. Last year, you had communicated that there are one specialty chemical and one pharma intermediate would go commercial. With this, in this quarter, I presume that even the pharma intermediate has gone commercial. We have commercialized two opportunities in this financial year. Is that the right understanding? Yeah. Last year, early part, we have commercialized the API side of the business, and last quarter, we commercialized the CRAMS side of the business. Yes. Okay. You have communicated that another five projects are on Phase III as of now? Yes, sir. Okay. In terms of ANDAs, first off, we had filed five new ANDAs. Anything we have done into Q3 and also how many we have launched so far? I mean, so far we have filed 17 ANDAs together, and approved are nine. As of last quarter, seven are launched t he two more approved will be launched sometime in the next three months. Okay, great. I have one bookkeeping question for Mr. Sunder. The sale of stake in Rising Pharma, has it been accounted in this quarter so that, I mean, is it getting reflected in the other income? Well, you know, the Rising Pharma will not be consolidated as a part of their income y ou know, under the equity method, which we've been doing it on a quarterly basis s o that will not be there because our stake has come down to only 7%. What is received, sir, the actual money, what is received, that is already there in the consolidated account. Yeah. What is getting reflected, actually earlier we had two line items. The P&L from associate company, and we had a normal, other income. This quarter we're seeing unusually high other income. Is it because of the, passing of the investment sale entry? [Inaudible] Okay. Fine. Thank you. Thanks. Thank you. Next question is from the line of Ankit from Oculus Capital. Please go ahead. Thanks for the opportunity, sir, and congrats on the great set of numbers. My question was, in a recent interview, we heard that your raw material pricing that is not passed on to the customer if there is any rise in raw materials. In this environment, when most of the commodity chemicals and all the other chemicals have gone up so much, how are we able to maintain such a good margin when the raw material price is not passed on? Also I want to know what is the duration of an average contract that we have for our customers? When do they get renewed, and how does it happen? One thing you have to understand, there is no contract, period. In the sense, when you are doing a product which is in a clinical trial, there is nothing like a contract o nly if most likely passes that clinical trial goes to the next level, only then you get the repeat order. They cannot give a guaranteed contract, something like that. The duration, as you were saying, by the time we take up the project and deliver it, may be anywhere between six months to one year. That means it's the developmental aspects also would be taken care and also manufacturing and supply also have to be taken care of u nless these are the Phase I, Phase II compounds. Phase III, of course, anyway, that is already R&D part will not be there because it's only a scale-up on the manufacturing and supply. The material costs, see, these are all a campaign-based product. It's a small volume, high value-based product. Unlike generic, it's not every month you deliver. As I said, it can take six months to 12 months. When the order comes in, we already place the orders. Some of the raw materials, like raw solvents, we may not place immediately, but the critical raw materials we place upfront. There may not be that much increase in the cost. When it comes to the solvents, as you rightly said, certainly it will hit us. At the same time, we cannot pass on because we gave the cost six months ago. Only thing this can be passed on when we have a repeat order after success of this molecule at the clinical trial, and based on the raw material cost at that time compared to the original raw material cost at that time we can put a new pricing on it. I also said that in case of agrochemicals, which on a regular basis we supply because there is a possibility, not a possibility, there we are able to pass on some of the cost, not the total cost. There we could do something like that o n the client side, we could not pass on. Only when the repeat business comes in, then we increase the price. With respect to how do you manage the product mix, I mean, it is your product mix. It keeps changing t omorrow, I may be able to do the same volume. If my value-added products are not there, then my margins may be less. You cannot take one quarter and just say that. In general, we are maintaining it o ver the year, we are maintaining it plus +40% t hat's what I have given the guidance r ecently we have achieved +45% also. We still feel that it will remain at the same level, around 45%, in that range. Okay. The margins that we expect for the longer term is 45%. Right. Okay. Perfect. Thanks. Just one last question. This Rising Pharma that we sold, when you were accounting for its income, looks like almost INR 50 crores per annum we were earning from this associate. It was sold for somewhere around $55 million, including the stake that we have received in the company t hat is almost INR 400 crores value. Looks like it was sold for 8 times earnings. Any reason for this valuation? I don't. What do you mean by any reason for the valuation? I mean it looks a bit low. The INR 55 crores you were earning per annum, it was sold for INR 400 crore. Was it because of the nature of the business that it was more of a generic business? Yeah. You yourself said that because one quarter may be more, one quarter may be less t he generic businesses will not. One year it may be proper, sir, one year it may not be on an average a t the same time, we have gone there because it's the biggest partner coming into the picture who has other operations also which he can integrate and bring the business more business. We are looking for more business opportunities rather than we making a sale i t's not a few sale n o, we are still there. As you could see, by buying one of the assets which they have not bought it during this process, which we are now trying to buy it at the asset value only. We didn't get the high dollars from there, but we're not going to pay high dollars for the asset we are going to purchase e xactly, like a long-term perspective y ou cannot go one-on-one and just to make in a year and a half time 10 times, you cannot do that. You want to look for the long-term prospects. That's the way we have to think. Got it. it. Got it. Makes sense. Thank you, sir. Thank you. Thank you. you. Ladies and gentlemen, we would like to remind our participants to please restrict their questions to three per participant. Time permitting, you may return to the queue for your follow-up questions, as we have several participants in the queue waiting for their turn. The next question is from the line of Rahul Jeewani from [Unintelligible]. Please go ahead. Yeah. Thanks for the opportunity, and congratulations for very good numbers this quarter. Sir, firstly, your commentary on visibility for the coming quarters seems very strong now relative to what it was until last quarter. You have already spoken about the Pharma CRAMS segment. Can you also talk a bit about the specialty chemical segment? Is there any increased visibility there? Because earlier we were kind of expecting 10% growth this year in that segment, and in the nine months period itself, we have grown 7% over the entire FY 2021 numbers. If you can just speak a bit about that. I mean, I don't see much growth or more than what I have brought last time and what I have told last time on the agro side. On the CRAMS side, traction is much better and for the next two quarters at least. That's the guidance as of today. You expect the CRAMS revenue run rate to continue while in the specialty chemical segment, on an annualized basis, we might do what we had earlier guided. Is that correct? Yes, sir. Okay. Sir, my second question is on the stake that we have acquired in the new company. What is the outlook on that? Do we plan to hold it or we intend to monetize it in the near term? No, because the purpose is to get the long-term value creation while you get your money back. That's what the whole purpose is here, right? While we get your money back, it's not profits, right? This is a conglomerate, a $45 billion company which has two or three other pharmaceutical operations also under their belt, and they are going to take this to next level. In that process, we are going to get, we hope that we'll get more opportunities because they grow better because, you know, these PE firms, they expect growth, no? Similarly, with their growth, being a part of it, we would like to get a better growth prospect. At this time, no. Unless there's a value creation, maybe three, four years from now we may think about it. Okay. Understood. Sir, for FY 2023, are you in a position to give any guidance for FY 2023, like what could be the revenue? I clearly mentioned in my earlier comment that I cannot give more than six months. Today, tomorrow or yesterday. Same thing i t will remain the same. Our business model is such that my customer does not have the visibility because it's all at clinical trial-based, outcome-based results. It's very difficult for us to tell t his is max I can tell, six months. Got it. Thanks. Thank you very much. Next question is from the line of Vivek Gautam from GS Investment. Please go ahead. Hello. Yeah. Sir, yeah, any molecule of us going into the commercialization space, sir, and what impact it could have on top and bottom line short term, sir? No. See, I think you have to understand, what we get is the sales price only i t has nothing to do with the commercialized, the brand value because we are supplying the intermediates. Intermediates, I mean, on average the API cost in the brand, the thing itself is less than 2% to 3%. Out of that, even if maybe $2 to 3 billion value, it doesn't mean that we get a lot of it. What you see is, that year you'll get a good amount of growth and sustain that for the following years based on how the molecule performs in the market itself but y ou cannot. What kind of intermediate we are doing, early stage intermediate, later stage intermediate, regulated intermediate, it has various components. Just because it is commercialized, the only opportunity is, unlike in the earlier base CRAMS where Phase I, Phase II, you now go to the next level, so it's a zero to one but i n commercializing thing, you expect to get, maybe if you sell 10 kilos this year, tomorrow you may get 20 kilos or 50 kilos or 5 kilos s omething will be there. That's the only difference. Other than that, not much difference. Okay, sir. You were planning for the succession, sir, and professionalization of the company, sir a ny development on that front, sir? Not yet. We are still working on it because COVID has stopped many of the activities, including the relocation of the people and all that stuff. We are on the process. I hope you are not sick of me talking to you. No, sir. You have put up your, it's a fantastic achievement for anybody in one's lifetime. Starting out with 1995 IPOs and so much of time you have spent with the company, and we are grateful for that. That's it. Thank you. Sure. No, but we are little. Yeah. -working up. Yeah. Yeah. Does that answer your question, Mr. Gautam? Thank you. Our next question is from Kunal Maheshwari from Softlink Global. Please go ahead. Yeah, thank you for the opportunity. Just one. Is there any update on the Phase III molecules moving ahead? No, no update as of now. We did not get any information, I mean, from the customer. Still they are in the process, so. The timeline for this would be another six months or so? Highly possible to tell, sir, because it's only the results that will tell us and how fast they can give us the guidance i f they need it, they'll tell us. I mean, minimum it takes six months. As of now, nothing is there in the pipeline, which any customer told me that you should be prepared to for the next supply. May not go out or I mean, I don't know, but anything can happen any time but r ight now I don't have any indication when these things will be to the next level of operations. Assuming that hypothetically we do, these molecules do move from phase II to Phase IV, would we be ready in terms of capitalizing on it, in terms of capacity and our ability to deliver? Oh, yeah. Those things we never had any problem because even, when they go for the next level also, we have a time, at least six months time to do that i t's only instead of doing the campaign basis, we'll be doing the continuous basis and the same, thing. If there's any balancing equipment is needed, that can be done within a couple of months. Because the volumes are not going to be like, generic where hundreds of tons have to be done. That's what it is. Okay, fine. Just wanted to clarify again on the Casper potential acquisition of the plant. Is this going to be dilutive or not dilutive to your current business in terms of margins? Oh, listen here. I mean, margins, you see, generics, we have a different profile of the margins. We are talking as from one side where everybody is expecting the top line growth also now. That is kind of inorganic thing also we need to look into it, which is an opportunity that has popped up suddenly. Otherwise, this is a, as you know, whatever formulations what we are doing is a leveraging exercise. You know it has a lesser margins compared to the class. At the same time, this being a profit sharing model, I think the margins when eventually it commercializes, I think it will come to the same level. It has its own gestation and timelines. Okay. Makes sense. Just last question, this is more to Sunder, sir. What would be the, if you can quantify the profit and sales amount in the other income which was there in this quarter? No, this. Profit and sale of investments in Rising. You know, other income has got different components, right? It is not just what we have total, there are about INR 55 crore worth of the bottom line of the sales net of the tax that we could consider. That is part of this. Oh, okay. Great. Thank you so much. Yeah. Thank you. Next question is from Darshit Shah from Nirvana Capital. Please go ahead. Hi, sir. Thanks for the opportunity and congratulations on such a great set of numbers in this kind of environment. My question pertains to this pharma plant, sir, which is commercialized, and I assume it's a COVID drug which you had earlier been alluding in our earlier calls. Sir, is this understanding correct? What is it again? Is this a COVID drug that what you're saying is commercial? Yeah. Can you say anything about the background? Yeah. Yeah. Yes, that is what it is. Yes. Yeah, exactly. Sir, my question pertains to that, sir t he innovator is quite upbeat on this particular drug. I know they have formed government contracts as well as what they are eyeing, and we are reading that probably they are planning to make 100 million plus of the courses of that particular drug by the end of calendar year 2022. Sir, this seems to be a really big opportunity from what the innovator is talking, sir. How do we sense this and what's your view on that? Your thing is too optimistic. That's all I can tell. You have to understand one thing. When we are talking about a drug which is going through the phases of clinical trials and gets the marketing authorization, there, the number of players that are available for the innovator is two or three or four. When a pandemic comes in and when they have to scale up and everything, they go after 10 to 15 different people. Okay. You don't get, unlike in a regular drug, where we're going only three or four suppliers for the same intermediate in a regular non-pandemic drug. A pandemic drug, it can be a what do you call, the opportunity is also maybe one or two years only. Not necessarily you will get the whole part of it or 20%, 30% of it because they need to have this in a hurry. They will have diverse sources. There is no restriction on this because they are, you could see they also are giving you compulsory license in other countries also. They source this material from so many sources. Yes, we have an opportunity, and we keep supplying w e'll be one of the things b ut at the same time, they don't give everything to the people. But you have to understand, don't think just because it is so much business they are doing it, I think, we have a bigger opportunity. Yes, we have a good opportunity, but you can't think that in a gigantic numbers, but it is a continuing opportunity. Correct. That I understand o bviously, sir, they will be sourcing it from multiple players f rom the sheer number of sources they are saying it's a good number that coming up. Anyway, sir. Sir, do you kind of supply intermediate for both the antiviral drugs use that API? since you're earlier delivering some product where you are supplying to intermediates for that particular ultra? I can supply one intermediate for the new drug. Novel. Okay. That's for the novel API, which they are making it there. Yes. Yes. You know that I'm always in the novel things, not in general things. Yeah. Yeah. Correct. Great, sir. Sir, all the best for this opportunity, sir. Yeah. Thanks. Thank you. Next question is from Ranvir Singh from Sunidhi Securities. Please go ahead. Yeah. Thanks for taking my question. Sir, I joined a bit late, so if you have already explained it, I'm not sure. Just I wanted to understand the transaction with Rising. Two things I wanted, clarity t hat after sale of 25% stake there, will Rising continue to market our formulations? It's only the stake sale. The business remains the same. No changes in the business. The contracts, whatever it is, the existing products, everything will remain the same. So then- The shareholding is reduced. I mean, we got a new shareholding in a new company, but by divesting the existing shareholding, where we got our money back, plus a residual share of 7% in the new company. Okay. The 15% stake you have taken in that region, what benefit actually that will give in terms of revenue or profit? What's that again? The 15% stake which you have taken in a region. 15%. Where is 15%? 15%. We have 25% stake in Rising Pharma Holdings. The Rising Pharma Holdings, along with Aster Pharma USA, was sold to H.I.G. partners to form a company called Raisin Aggregator company. That's a new company where we have received $40.5 million in cash, $15.8 million worth of shares in the new company. It's 7%. 7% equivalent, not 15%. 7% of the new company. We have the contracts in place as it is, the business runs. We also have a new opportunity to acquire a new place where they have contracts, long-term contracts, which we can take advantage of. That's what it is. Okay. How accounting treatment in this quarter has been done. How much profit we have in this P&L this quarter? Yes. There is a profit element, whatever the cash realization on which capital gain we made, that is accounted for as other income i t is part of that. The INR 35 crores net of tax has been included here. Apart from that, the new stake, whatever is there, it is $15.8 million- -will be continued to show in the Raisin Aggregator, in the Sun Pharma linked books as further investment in Raisin Aggregator, L.P. that is the one where we have a stake of 7%. The accounting treatment will be the new stake will be there. The old stake to the extent whatever we realized capital gain, that is realized in the form of cash there, it is there in the consolidated account. Realized capital gain is $5 million? It is about INR 35.41 crore net of taxes in India. Okay. For the new company we are going to acquire, Berlin capital, what kind of investment we'll be making in this entity? We are taking a majority. No, no. That will be known only after the diligence. Okay. Any timeline when this company may start giving revenue to us? Hopefully in a month and a half time. We need to complete the legal due diligence, financial due diligence, and also the valuation exercise. Then a decision will be taken. Okay. The last one. Sorry to interrupt, but may we please request you to return to the queue as we have several participants waiting for their turn. Sure, sure. Thank you. Next question is from the line of Cyndrella Carvalho from Centrum Broking. Please go ahead. Yes, thanks for the opportunity, and congratulations on great set of numbers. Sir, if we look at our FY 2021 pharma base, it has significantly improved. Now, if we look at our nine month FY 2022 pharma base, we have almost closer to our last year's pharma base. You can actually say there's a commercialization issue in this quarter and in the last quarter. I mean, what strengths are we bringing in our business? It's consistently outperforming our guidelines. Amid pandemic also, we face earlier challenges also, but however, we continue to expand this base ahead of our estimates w hat strengths that we are bringing into this business, which is allowing us to do that? What more things that you want to bring on the table, which will enable this platform to continue in this same number? Can you allude to this, and can you also take us through your thought process on these areas? Also, the second part of it is on the specialty side also. If you can highlight this, would be very helpful for us, because we are increasingly doing better. Yes. I hope you will say the same thing when the volume goes down also because the thing is in the business, the business model itself, based on the success of the molecules, the opportunity comes in, that's why you could perform. It is not that we've ever done anything different. And also the valuations are also coming based on the product mix. Then now as I was telling you, the traction is much better in the clinical compounds where they are maturing into the next level or going to the next opportunity. That's why you could see this t here's nothing different what we are doing all these years. It is the success of the molecules as the clinical is going to give us the success. Yes, it now is giving about 25% or closer to growth rate, but sometimes it can go double also if the number of molecules moves to the next level. At the same time, maintaining that is going to be a humongous task because after the success will go to the next level, then whether repeat business takes maybe 18 to 24 months sometimes. It's very difficult. As of now, as I said earlier, for the next six months, it looks good. Hope more things will come into the picture so that we can continue our robust business that is existing as of now. With respect to the specialty chemicals also, same thing, as I said, 5% to 10% growth is possible and which is going in the same line. The molecules in the development, if they move into the next level, then you can get the opportunity a t the same time, the molecules which are in the supply chain also, if they have a better market potential which likely to have, that also can give us a better prospects. Unlike generic molecules, all these NCE-based NCE-based molecules which has this positives and negatives. That's where I mean so far so good. Certainly a couple of products maybe nothing may happen also. But as you could see for the last 10, 15 years, on an average, we are maintaining 10% to 15% growth year-on-year. We understand in terms of molecule success, you know, that is very well understood as a part of our business model. But what I was trying to understand is, are there any core strategies that you're executing in terms of, you know, coping up with these to enable ourselves to support these newer technologies or any newer acquisition of lines or, you know, new segments which enable us to support these developments, right, in the right direction. Yeah. Yeah. What is your thought process on that? As I mentioned last time itself, as a matter of fact, we have a portion about INR 50 crore towards technology acquisition. In addition to that, I see the thing is if I want to do something and sell on my own in the market, then it's a different ballgame to acquire the technologies. These technologies are acquired or required based on the requirement of the customer feedback. But at the same time, I mean, we are very proactive in engaging with the customer for their future requirements, in updating our facilities, in creating the infrastructure for that, and also at the same time, engaging in acquiring new technologies. These are the continuous process. First time we have just earmarked some INR 50 crore. As a matter of fact, every year we are doing something which is not much do we talk about it, but at the same time, we have some ideas which we have brought to the notice of the because they have to sponsor these products. We can put the infrastructure u nless the product is there to work on the technology, because since we are not a talk and sale item guys, we have to depend on the customer's feedback and customer's requirement. Yes, you're right t hose are the areas we are focusing on, and we are continuously engaging with the customer on that aspect also. Hopefully, some of these things which are required for them will be there by the time they require it because we are engaging them ahead of time, two to three years ahead of time, slowly and creating infrastructure to it, and also. That's great, sir. Thank you so much. You know, we look forward to seeing these changes and looking forward to the next performance. Also one more thing, have you clarified what is the impact on the P&L, given that there is a logistical cost still remains upward? Have you said that number earlier? For this quarter, I mean Q3. No, no. There is nothing much. Like, you've seen that it's a robust 200. I think, it could have been 3% more. Yeah. Basically, you know, the raw material cost, you know, 280 basis points compared to previous year, I know there is an increase, but it did not really impact us so much. Great. Thank you for that clarification. Just one last from my end, sir. Once now this cash is back on our books, so any immediate thought process apart from the Casper evaluation that you're working on right now, but anything else that comes to your mind that's priority? No. Right now we have declared a dividend as part of the amount, which is part of our cash, which is INR 3 [Unintelligible] which is already+ announced. Plus the Casper thing is we are evaluating right now. Other than that, we don't have any plans for any other thing because we have our own CapEx to spend, right? We have INR 600 crore to be spent over a period of next two to three years, actually. You know, the focus is more on that as of now. As of now, we are not part of anything w e work one at a time, and we are doing one at a time. Yeah. Got Yeah. Got you. We'll come back to you if there is a change in the thought process. Thank you so much, sir, and all the best. Thank you. Thank you. Next question is coming up from Ashwin. Please go ahead. Yeah. Hi, sir. I might have missed it. Did you give a guidance for the full year, sir? I can't give you the guidance. I never gave the guidance. I will not be able to give the guidance. I said it's only six months I have the visibility. My customer also has the same visibility. I think I want everybody to know I cannot give a yearly guidance, period. Thank you. Understood. Sir, when you talk about this 15% growth on a longer term basis, that is what you keep trying. It is just more of a track record rather than giving a specific guidance. Is that correct, sir? Because, see, that is only based on the past record, right? Since I can't give any forward-looking things, so I had to hop on and hope to achieve that, a minimum of that, because that's all we have because there's a traction that is happening. I may not have the numbers-wise, but the quality of things that are going on, based on that only we are telling. Success of the molecules will give us the success. If something is there, suppose if I know a couple of molecules from Phase III to going to the next level, I can say, yeah, next day, nine months downwards, I may have another 10% to 15% growth add on to the existing growth I can tell. Right now, as I was telling to other gentleman, for the next six months, anything is there out of the five molecules, so far I have not received any intimation i t may happen tomorrow or day after also. It is possible because things are very dynamic. Giving a yearly guidance is very difficult for me. Neither my customer can give it to me. I'm unable to do that. I stuck to that, three to six months maximum based on the results. Understood. Last thing I just wanted to check that earlier you used to kind of give us a guidance that you will be able to sustainably deliver a 40% kind of margin. So have you kind of increased that to 45% now? If any particular reason why you're looking at a better margin trajectory going forward? Based on the last three quarters and all that stuff, based on the next two quarters, I'm sticking my neck out to around 45%. It is not as if like a longer term target, right? As I said, when I have a visibility of six months only, how can I give a longer term target, sir? That's my problem. That's the biggest problem. You have to go to see. I mean, the past also you have to see, and hopefully it will come. I can't say yes, I will do the next ten years like this. It's very difficult to tell me. Understood. Thank you. Thank you. Thank you. Next question is in the line of Anshul Saigal from Kotak [Uninteligible]. Please go ahead. Thanks for taking my question. Many of your Chinese competitors have been put on an Unverified List by the U.S. Department of Commerce. How could that have a rub-off effect on our business? No, because the business model where we are in, we are engaged with the innovators in the clinical phase of the drug development. We are not into generics. The effect will be more or less nothing on Suven's business model. I can't tell for the generic players. No, even companies like WuXi have been put on this list. Those companies are actually contract manufacturers. They have a similar business to what we do. Still you don't think there will be any rub-off impact? Putting it on the list is one thing a ctually implementing is the other thing so w hen they start implementing we have some idea, then we will be now able to know it r ight now I cannot tell because WuXi is one of the biggest, you know, and for WuXi there is 100 plus people outside the thing, how much anybody can get out of that, we don't know. The implementation is the name of the game, right? It's the very beginning, so we cannot give any indication how it will work y es, it may have a positive effect. Other than that, I cannot tell you, quantify it. Okay. We've added over the last three odd years, roughly 100 gross. I think by March 2021, our gross profit was INR 570 crores, and we may have by now added another INR 95 to 100 crores to our growth of the capital routing program. Now given that we had lost 67 kind of gross profit, what kind of revenue potential does this incremental gross block have on our business? Mr. Anshul, your line is ready. Participants request you all to please stay silent while we check for the connection to the management. Apologies for the delay y ou have the line now reconnected for the management. Yes, go ahead p robably you can put the next person on the queue because the last one, the voice was very feeble. Mr. [Unintelligible] Yes. Can you hear me now? Yes. Yes, sir. My question was that, we've added roughly INR 300 crore to our gross block over the last three odd years. What is the incremental revenue potential from this gross block addition? Investment per se, there is no incremental revenue t his is a requirement of this thing, and it cannot be on a what do you call. Sometimes the investment we put into it can recover within one year's time. We are not putting it that way because these are all the value-added products or campaign-based products. As I was telling, I cannot even give you a guidance for that. Incremental thing is not the question. It's value-added purposes most of the time we are doing, and sometimes we are doing it for the enhancement of the capacities also. You see the difference between the sales we have done at that time to the sales we have done at this time. There will be a need for that, and we have to do this proactively ahead of time, then based on that, the value creation will happen. Unlike generic, where I can give you a guidance of how much incremental growth in the things can happen. Here, it may be the value-added product, or it may be an additive to the volume-based activity also that can happen. It's really difficult in our case to give you a guidance based on the CapEx we have done, which we never be able to get. I can give you an example where you can appreciate it. If you ask me, because this is a CapEx-based product, that means the plant is not running fully in the sense. If a generic, if you have 20 reactors for one product, all the reactors are occupied all the time, so you can tell. In our case, if you ask me, what's your capacity utilization today, I would say 100%. But if you see you can't see it actually in physical form, it will be only about 75% to 80% because not all of the equipments cannot be used for certain products. Some of them will be vacant. Sometimes they're going into the balancing equipment. You cannot go by the asset allocation on a, unlike other business models or the CapEx-based activity. It is, in general, a proactive approach to the requirements of the customer, and getting the value creation on that eventually. It's very difficult as a business model to tell this numbers. My final question. This with the incremental CapEx, if I was to put it differently, what is the change in conversation that we are having with clients in regard to, say, the products or value addition? Anything that you can throw light on that. Yes. Since COVID broke out, has there been an enhancement in inquiries that we have been receiving? I mean, the inquiries are same. As a matter of fact, this is little less than the regular ones because most of the people are concentrating on the COVID-based activities rather than the multipurpose activities. Slowly that is coming back to the normalcy now. Last one or two years, there are less number of inquiries for the normal projects. Okay. When it comes to these CapEx, the CapEx we are now apportioned for INR 600 crore is to get a new block instead of the 35-year-old block in the Suryapet plant t hat is only going to give you the updated infrastructure with all the requirements that is needed. The capacity-wise, a little bit traditional capacity will come, but not much to talk about it. In the relocation of the R&D center, there is nothing going to be an additional thing because that's a requirement that inside the ring road to outside ring road we have to go. That is that purpose. The only we are putting in the Pashamylaram, around INR 200 crores, is going to be the part of the additional capacity creation for the new requirements, including the new requirements by the customers, types of reactors, different types of operations, and the types of technology to be used, and also what do you call, the OEL facilities. That kind of an opportunity that we need to create for future. That is the only thing for the capacity expansion. This is the rationale what we have thought of on the CapEx. It is a catch-22 if you don't have the capacity with the required. Because when we're doing multi-number projects, the requirements are different compared to if you know you are doing 10 of the same products day in, day out, you know what kind of infrastructure you have to put in. It's a multipurpose and multi technologies may be incorporated in that, and some of them may be not utilized, but at the same time will incur the cost. That's a proactive nature to get the contributor to run the business with the customers. This is what I was telling earlier. We are engaged with the customers in sustaining their needs, either in terms of the infrastructure or in terms of the acquisition of the technologies. They are the sponsors. Until that time, we don't do anything other than doing this kind of activity. Got it. Thank you. Thanks for patiently answering the question. Thank you, sir. Next question is from the line of Pratik Kothari from Unique PMS. Please go ahead. Hi, good afternoon, and thank you for the opportunity. Just to reconfirm this asset that we are acquiring Hyderabad of Casper Pharma, the oral solids are generics, right? The one that will be manufacturing. Yeah, generic solid is for both tablets and capsules. Eventually, liquids can be accommodated in the future expansion. Fair enough. You also made this comment earlier, and we have always been thinking that we'll always be on the novel side. Just, why this change and what is this thought process to enter generic now? We have entered this five years ago, and I clearly mentioned it's a leverage exercise. Novel side is always there, and that is our bread and butter, and we're focusing on that. At the same time, there is an opportunity because we have the skill sets that are there and which we are not able to utilize fully. We have to utilize it. This is going not unlike other big players where generics and blockbuster generics, we are going to a niche generics at the fringe of it, not competing with anybody, trying to do the leverage and get some profit out of it. It's an additional avenue to generate the revenues. Very nice. Just to reconfirm again, we said that accounting for profit share and everything, the margins could come up to be similar to what our current levels are, eventually, maybe couple of years down the line. Yeah. Yeah, yeah. Fair enough. Thank you, sir, and all the best. Thank you. Thanks very much. Next question is from the line of Amit Mittal from Canara. Hi. Good afternoon, sir. I have two questions. Maybe I'll just try my luck. What are the total commercialized molecules right now, and what will be the total component of sales from this particular molecules of the total sales, like INR 390 what we did this year or this quarter? We have clearly mentioned that we are not giving any breakup on this because they are not consistent. They keep changing, so it doesn't give any indication to anybody. In general, the total CRAMS sales volume we are telling. five commercial molecules. That's what you said. We have five commercial molecules, but the sales in a particular quarter cannot be- They are giving a pick-up on those things. Totally INR 266 crore what we have done for this quarter. For nine months we did about INR 563.9 crore under CRAMS, Pharma CRAMS. Got it. Any, like, maybe on annualized basis also you guys are not going to share what will be that percentage? Because the reason why I'm asking is I can understand the quarterly changes for this commercialized molecules must be going through. Even yearly also is not giving guidance. I cannot give guidance to somebody when I can't understand myself because it keeps changing. It is not going to be a regular like a generic where it can take place even though it's a commercialized one. One of the molecules with women's health, since one and two years, there is no repeat order. It's very difficult because people, they are putting an Excel sheet saying that, "Okay, this year you did this much for this particular molecule. So next year you will be able to do this." They put that and they question me. When I cannot perform that way, when I won't be knowing that way, I cannot give you. That's why we have dispensed away giving the Individual molecule basis rather than the total percentage of the growth year rate. Even on a year-on-year basis, the ratio of the commercial to pre-commercial could vary actually. It could be 40/60, it could be 50/50, or it could be 60% commercial and 40% pre-commercial. It keeps changing actually. Because of that, you know, people make a kind of wrong estimate or wrong guess. We don't want them to make some wrong purely putting in Excel sheet and trying to calculate. That is the reason actually. For us, what it matters is total CRAMS, Pharma CRAMS, total specialty chemicals. That's how we focus on, and that's what we are trying to give. Okay. I appreciate. My second question was that, and I am again trying my luck here, is that, you mentioned in your maybe opening remarks, maybe somewhere, like there are total five molecules in Phase III. Am I right to catch that number? Yes, yes. You're right. Just, like, wanted to know what would be the age of that youngest and the oldest molecule in this particular five. At least that indication can you provide us? It has nothing to do with your future. I'm just trying to get a sense out of it. I have to give you a scenario. The reason is some categories, the total duration for a Phase II clinical trial can be two years. Some categories, the duration can be five years. It's very difficult to base anything that is there. The youngest is about nine months and the oldest is around four years. Oh, got you. That doesn't give anything. No. That's the problem. I understand, sir. I have been following you for eight years, so we understand all these things. Need not explain. It's just for, like, how do we get some sense of the maybe future, which is my first question. I'll give you one more feedback. I mean, I never count on anything until it is successful. That's why I won't give any guesswork. Okay. No problem. I got my answer, sir. Thank you. Have a nice day, sir. Thank you. Thank you. Next question is from the line of V. T. Rajanathan, an Individual Investor. Please go ahead. Hi. Good afternoon, sir. Just two quick questions. You said the R&D center was shifted from the inner ring road to the outer ring road. Is there any government compensation, which will be provided for the same? Number one question. This is my first question, please. No, they won't. It's a requirement. Any R&D facility with the pilot plant in the R&D facility, chemical R&D facility inside the ring road, they need to be checked out. The timelines, they are another two to three years. We are planning ahead of time rather than waiting till the last minute. With respect to the compensation, no, they're not gonna give any compensation. It's not like China, where they can give you 100% relocation compensation. Here, they don't give anything. As a matter of fact, to the association we are requesting, whoever is moving out of this place because of the regulation, at least they should provide the land at a reasonable cost. Even that is not being taken care of. It's very difficult. I hope they'll do something about it, but as of now. Right now, I am given to understand that we have to buy the land at the current market rate, and that has been a portion, too, in the INR 600 crore. Am I right, please? Yeah, yeah. We are planning around INR 150 crores for that purpose. Okay. My second question is based on the recent sale of Rising Pharmaceuticals, certain stake and the capital gains which accrued from it, which we have to pay. Is there any saving when we acquire Casper Pharma or any other this one? Will we be able to save something from that particular capital gain? They are independent. It has nothing to do with it. Okay. Thank you, sir. That was my two quick questions. Thank you. Thank you. Thank you very much. Next question is from the line of Nikhil from Galaxy International. Please go ahead. Yeah. Thank you for the opportunity. Just one quick question. With the acquisition of this Casper facility, do we actually want to offer CRAMS services to innovators for formulation work also? Or is it like, we want to use it only for our own ANDA filing, as we have been planning to do for our earlier formulation facility? This is a formulation facility. It has a long-term contract with Rising Pharma already, and it is only for the formulation only. Whenever these new products are coming, there is a possibility that the API may be needed, which we can do from the CRAMS side of the business also. It's creative that way. It's only purely formulations. It is for the already filed ANDAs and also future R&D projects arising out of Rising's R&D facility will be scaled up, filed and manufactured and supplied on a profit-sharing basis. Okay. Thank you, sir. Thank you. Thank you. Participants, we would request you to please restrict your questions to queue for participants. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Hi, sir. Thank you for follow-up. Firstly, can you share some insights on the existing formulation business of ours? Like, how do you see that playing out in FY 2023? Here at least I believe you'll have some visibility in terms of launches and et cetera. I mean, in last year you had mentioned that in FY 2023 you're expecting five or four 505(b)(2) products. If you can update something on that. Yeah, the existing facility will be useful for all those things which are in the pipeline for us, and that will be sufficient. As I said, the capacity is less than 400 million. The new opportunity has come because of this divestment of our stake in the things, and they are divesting their asset in India. For us, as a partner, we have the opportunity, first opportunity to bid for it, that's why we're going for it. It is two independent things. This is a new opportunity, that's an existing opportunity for the existing molecule. Yeah. I wanted to understand the visibility in terms of the existing business that we have. Existing, as and when the commercialization takes place, and as I said, two more things are approved, and that will be supplied within the next three to four months. Similarly, there are another 10 products that are, what do you call, filed, and they will be coming into the approval process. One by one it will come because it's not in our hands. It's the API also. Some of these products, inspection of the facility is one thing. I mean, approval is a different thing. As far as inspection is concerned, we have no problem facility-wise. The approval for the product is taking time, and as and when it's ready, I think we'll get it. Right. Any visibility on FY 2023 for the business, sir, on this formulations? What is it again? Formulation visibility. I mean, FY 2023. Oh, no, I cannot tell right now. I mean, we don't have. The thing is, it is very niche molecule, small molecule, small volume molecule. By the time the approval takes place, how many other guys to get all their API, we need to know. So it's very difficult. These are a leveraging exercise, and we want to increase the our pie in this side also. Right. Secondly, sir, any thoughts on expanding Suven's CRAMS expertise in the biologics front? Not now, no. That's a different ballgame, so we're not in there. Any specific reason? Because, maybe because of the size of the business or it requires some different expertise on the R&D front. Any specific reason why we don't want to do it? Yes. Different expertise is needed. That means different infrastructure has to be created, different mindset of people. It has to be different. It's not into my brain also, so I'm not going in that direction. I have to understand fully before I go into something. That's why. Right. It's not in my system. Yeah. Last, just a clarification. Typically, whenever, like, you have said that we have got a new molecule commercial in this quarter, and typically, historically, whenever a new molecule goes into commercial, we have a pre-run commercial quantity, and then it kind of tapers off for a year or so. Will that happen for this molecule as well? Yeah. I mean, depending on the size of the things and requirements and all that stuff, everything is same. It may be a repeat order, can be six months later, or it can be one year later or 18 months later, depending how the molecules performs. That's an ongoing process. There's no set rules for that. It all depends on the project, product to product. The reason I was asking this because you mentioned that this is a COVID product, so maybe there could be a scarring supplier, which is all the idea of things. Yeah. There are many suppliers for this because it is a pandemic product. Right. Okay, got it. That was very helpful, sir. Thanks. Thank you. Thank you. Next question, follow-up from the line of Saravanan from Unifi Capital. Please go ahead. Yeah. Thanks for the follow-up. On the taxation front, Mr. Sunder, can you give us some guidance for FY 2023? This quarter seems high. Is it because of the capital gain? Yes. That is only. Will it normalize to our normal 23% to 25% range? [Inaudible] Okay. On the formulations, earlier we had an aspiration, wherein a couple of years formulations could be 1/3 of our business. From a FY 2024 perspective, do we continue to nurture that aspiration? We continue to have the aspiration, but the reality will kick in when depending on the type of the molecules we are and the type of the competition we'll be in. Yes, we continue to have the same aspiration. Got it, sir. All the best. Thank you. Thank you. Okay. Next question is, last question for today, which is from the line of Darshit Shah from Nirvana Capital. Please go ahead. Yeah. Thanks for the follow-up opportunity. Sir, on the API front, which we were alluding to last year or two years, since we want to migrate from intermediate to APIs, and I understand we were in talks with our innovator partners also, and the paperwork was going on. Sir, since now the traveling has little bit eased off, so where are we on that front, sir? Now we are in the status quo mode only because it's just started, but the priorities will change. You know, when they start things, they will go for the old one first and the new one opportunities. We are more interested than they themselves are, so they'll take their own time. I have not traveled last two years. Similarly, none of my customers have come last two years. Even they, when they come, they'll look for the present things and what are doing things that are there. We are tracking on that, and it's not moving faster at this time. Hopefully, with this, new restrictions are going away, hopefully things will move the place. It's a long run process, sir. It's not that we are in the lookout. We are in there working out in that direction. Sure. Thanks and all the best. Thank you. Thank you. Ladies and gentlemen, I now hand the conference over to the management for closing comments. Over to you. Thank you one and all for allowing me into this investor's call about this Q3. As I have mentioned earlier, things are looking good in terms of the trials, formulation trials and for the next two quarters also looking good. I hope the traction will be in the same mode so that we can perform much better, especially in the agrochemicals, things are in the same way as I mentioned earlier, 5% to 10% growth, until we get the new development to project commercialization, which is two years away. In the formulation front, two more projects are being approved, and we are trying to launch those in the next two to three months time frame. Similarly, additional ANDAs will be filed. We'll come back to you when the LOI given for this opportunity to acquire the Casper Pharma. When it matures into purchase, we'll get back to you and update you on that. All in all, things are looking good and even under the trying circumstances with the, as I mentioned earlier, the only drawback that will happen for the existing growth to continue is non-availability of some of the critical raw materials. That's the only problem, which I cannot guess estimate at this time. Otherwise, things are moving normally. Thank you, and look forward to talking to you next time around. Thanks. Thank you very much.