Good ladies and gentlemen. Good day, and welcome to the Q3 FY 2024 earnings conference call of Suven Pharmaceuticals Limited. Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the results presentation that was sent to you earlier. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Cyndrella Carvalho, Head, Investor Relations from Suven Pharmaceuticals Limited. Thank you. Over to you, ma'am. Thanks, Joel. Good evening, everyone, and a warm welcome to you all on Suven Pharma's quarterly FY 2024 earnings call. Let me introduce you to our management team present here with us today. We have our Executive Chairman, Mr. Annaswamy Vaidheesh, our Managing Director, Dr. V. Prasada Raju, our CEO, Dr. Sudhir Kumar Singh, our new CFO, Himanshu Agarwal. Our management team will delve into industry dynamics, strategy, and operational highlights for 9 months and quarter. Following that, CFO Himanshu will provide in-depth insights into our financial performance. Later, we'll open the call for Q&A. Let us proceed with the opening remarks from our Executive Chairman, Mr. Vaidheesh. Thank you, Cinderella. Good evening, everyone. We extend a warm welcome to all of you on our Q3 FY 2024 earnings conference call. To start with, at a macro level, our third quarter results were in line as expected. As indicated in the previous quarter, near-term macro challenges persist due to industry-wide inventory destocking in specialty chemicals and impact on growth due to COVID supplies in the base for Pharma CDMO. This is likely to keep our next few quarters' performance soft. However, we remain very confident about mid-term. We have focused on fostering customer relationships, optimizing operations, and strategically positioning ourselves for long-term growth. We continue to have engaging conversations with our existing and potential customers on the early and late commercial projects. The current RFQs pipeline sustains a higher pace, and we are witnessing traction in the RFQs conversions. We are striving toward business opportunities in the medium term. As you are aware that, we have also announced our ESOP scheme, reinforcing our commitment to employee benefits and talent retention. The resolution is ongoing. ESOPs are intended to not only foster a sense of ownership and motivation, but also aligns directly with our growth objectives, creating dynamic environment. By linking employee interest with Suven's pharma growth, we aim to deliver value to both our employees and shareholders. For our midterm, we continue to be optimistic, and all our energies are driven behind what we think is a good growth opportunity in the midterm and long term. So with that, I'll hand it over to Dr. Sudhir Kumar Singh. Thank you, Vaidheesh. Welcome everyone on this earnings call. As Vaidheesh mentioned in his speech, the RFQ pipeline and conversions are progressing well, as we strive towards medium-term business opportunities. Our focus lies on prioritizing strategic customer relationships, operational optimization, and fostering long-term growth. The ongoing progress of our R&D lab and Suryapet expansion, operational capacity expansion, is consistent with our effort towards Suven plus growth trajectory. Our business development team position us for continued success in the strategic growth opportunity, as several discussions on early and late-stage project engagements are ongoing. Despite near-term softness, our confidence remains strong in achieving medium-term growth. Now, I request our Managing Director, Dr. Prasada Raju, to open any remarks. Thank you, Dr. Sudhir, and our Chairman, Annaswamy Vaidheesh. Very good evening to all of you, and warm welcome to our company's earnings call. Our priorities for the coming year include the persistent engagement with customers, building out respective teams, ongoing investment in infrastructure for EHS and ESG as a part of our strengthening our business fundamentals. Consistent cost improvement and strategic investments in technology and capability building is an important priority. Apart from this, we are also focusing on extensive M&A pipeline. Near-term macro challenges persist due to industry-wide inventory destocking in specialty chemicals and impact of COVID supplies in the base. This is likely to keep our next few quarter performance soft. However, we remain confident about our medium term. ... We are pleased to welcome Mr. Himanshu Agarwal as our new CFO, bringing with him an impressive career spanning over 28 years. He has previously held key roles at Bennett and Coleman, Tata Motors, AkzoNobel India, AstraZeneca, and ICI India. I will now invite our CFO, Himanshu, to share the financial insights. Thank you. Thank you, Dr. Prasada, and thank you to my team for welcoming me in the Suven family. At the outset, I would like to express my gratitude to Mr. Sundir and Mr. Subba Rao for their significant contributions to Suven's success. Moving to the results, I think as expected and as informed earlier, we are at Suven adjusting to a global destocking in the second business, as well as to the COVID molecule-based effect. I think as has been communicated earlier, our nature of the business is such that a quarter-to-quarter performance is not really reflected of the two business performance. Our business performance is much better understood and reflected through the YTD numbers. Therefore, I will first cover the nine months of FY 2024. In the nine months of FY 2024, our revenue from operation was at INR 798 crore, reflecting a decline of 18%. However, as mentioned by Dr. Sudhir, the second business is down due to global destocking, and we still have COVID molecules last year base effect. If you were to exclude these two elements from our base, then the underlying business revenue is at a growth of 35%, and the pharma CDMO business, excluding the COVID molecule, has grown at around 2%. Despite the softness in the revenue due to macro headwinds, our adjusted EBITDA is at INR 348 crore, which is at a very healthy EBITDA margin of 44% and ahead of last year EBITDA, adjusted EBITDA margins of 31%. Similarly, the business adjusted PAT at INR 257 crore is at a margin of 32%, which is well ahead of last year adjusted PAT margin of 29%. As Dr. Sudhir said, our capacity expansion at Suryapet is going well. We had committed INR 200 crore on Suryapet, and we progress in the right direction on that. And similarly, we have, as mentioned earlier, allotted a CapEx of around INR 30-40 crore in our new R&D facility, which continues in progress in line with our plans. I mentioned earlier, the quarter-to-quarter do not reflect the true nature of our business. Nevertheless, I will still cover the quarter three financials as reported. As you would notice in the press release, our quarter three reflects the cost associated with the new hires and the ongoing implementation of new systems and processes in the results. Our revenue from operations is INR 222 crore, which is declined 38%. While overall growth has been impacted by second destocking and base effect of COVID molecule, excluding these two elements, the revenue grows at around 2%. The adjusted EBITDA is in line with previous year EBITDA. EBITDA margin is around 36% versus the last year EBITDA margin of 38%. Similarly, the PAT at INR 57 crore comes with a margin at 26%, in line with the last year margin of 28%. Now, I will request, Dr. Vaidheesh, if you could give us a summary. Thank you, Himanshu. So we anticipate that the near-term macro challenges will persist due to industry-wide destocking, which I mentioned it in the beginning itself, and this is likely to keep our next few quarter performance up. But as I mentioned, we remain confident about midterm. In summary, our transition to new management is complete, and we have strengthened our senior leadership. And despite short-term challenges, our focus on customer engagement, strategic initiatives, and medium to long-term macro tailwinds remains unwaveringly strong. And with this, we thank you for your time and 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 withdraw yourself from the question, you may press star and two. Ladies and gentlemen, we request that you please restrict yourselves to two questions per person. You may rejoin the queue for follow-up questions. Please use headsets while asking a question. We will now wait for a moment while the question queue assembles. The first question is from the line of Gokul Maheshwari from Awriga Capital Advisors. Please go ahead. Yeah. I just wanted to check, what was the revenues from the COVID molecule in the same quarter last year, which you are referring to as a high base? ... So, Gokul, I mean, what's important is that what we've highlighted, that our business, excluding the COVID molecule, in nine months, is at positive 2%. Okay? I mean, unfortunately, we would not be in a position to give an individual molecule-by-molecule level information. Okay, sir, the previous management had indicated that the COVID revenues in year FY 2022 was INR 120 crore. So, this was bit of a surprise that in FY 2023, there was no COVID revenue as such. So, are you saying that there is no revenues in the Q3 FY 2023 quarter for COVID? Because you are referring to the 9-month number as a year-to-date figure. Which is correct. Q3 FY 23 did not have a COVID revenue number. Thank you. So in that case, the CDMO business or the pharma CDMO business has seen a 33% drop in this particular quarter. Is there any particular reason why there is such a sharp drop in the business in this particular quarter and in business? No, I don't think so. I have given you any number in terms of a pharma CDMO drop. I think what's relevant, as I said, that we have very categorically said that this business is not representative from a quarter-to-quarter perspective. We will have to look at this business from a YTD perspective, because otherwise, the business will not give a sense. And see, that's very important for us to understand, that we have to look at this business from a YTD perspective rather than quarter-on-quarter perspective. Just the second question is on the Cohance model you mentioned in your annual report that there is a plan to merge this company. Could you give an update on what is the strategy on that plan and what's the progress? So, see, from a board perspective, we have passed a resolution for evaluation, and we are in the process of evaluating that merger. We will update you once we have more understanding. Okay, great. Thank you. Thank you. The next question is from the line of Darshit Shah from Nirvana Capital. Please go ahead. Yeah. Good. Thanks for the opportunity. So just wanted to know, so, you know, if you got us back, whether we, that there were around five molecules in phase III trials. So would the management be able to tell us what this, you know, how many molecules are currently in phase III ongoing? Thank you, Darshit. As of now, we don't get any new update at the moment. As you understand, it's a long-term in nature, and quarter-over-quarter significant movement cannot happen, and till they are at the same stage. And so earlier, you know, we used to get details on the number of projects we are currently ongoing under phase-wise details. So with the new management, we kind of able to provide those in your presentation and know, so that we get an idea of how many projects we have added, you know, which are in which phases. Your thought on that? Darshit, just to let you know, as you understand the kind of innovative customer that we deal with, we abide by certain NDAs, and we prefer not to dwell on to their pipeline status. And, you should kindly bear with us. We would not be able to dwell into that, right. Right. And so we are seeing that, you know, given the global situation we're talking right now, we expect next few quarters to be soft. So, when we expect normal growth kind of to return to the business, providing that none of the phase III molecules kind of go into commercial in the next few quarters. Darshit, as you understand, currently, we still are watching to understand how the bottom out of entire decline happens. We feel we might be at the middle of this cycle. Unless we clearly get a sense of whether it is completely bottomed out or not, we will not be able to really tell you how much time it will take for recovery. Got it. And then lastly, can you help us understand what this adjusted EBITDA, I mean, the old inventory provision that you have kind of provided in the recent presentation? Yeah, I'm requesting, CFO Himanshu, to take this. Himanshu. Darshit, as you would notice, actually, we have, in the press release, mentioned that the old inventory provision has been adjusted, for around INR 134 million, so which is INR 13.4 crores. So that's the number that has been, provided for as a one-time provision. This is just for this one time, for this quarter itself, or it will be a recurring thing now henceforth in our, kind of presentation and presentations? No. So this is, as I said, this is one-time provision for the old inventory that we have assessed at this stage. Okay. Got it. Got it. Okay, sir, thank you so much. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Participants, if you wish to ask questions, you may please press star and one. Ladies and gentlemen, if you wish to ask questions, you may please press star and one at this time. We have the next question from the line of Mayur Parkeria, from Wealth Managers (India) Private Limited. Please go ahead. Good evening, sir, and thank you for taking my question. Am I audible? Yes. Thank you. So I just had one question, and I understand that this is a qualitative remark, and you may not, but just to understand, there has been a reasonably long period of, you know, consolidation and, you know, which we have been looking for in the, as a company also. So if you can give some perspective about what do you mean when you say that the near term is challenging, but in the medium long term, you are there. So does the medium term mean one year plus, or is it a longest period than the medium term, or less? So Mayur, just to give you a perspective, there are two important challenges are happening. One is on the specialty chemical side, which is definitely, cyclical phenomenon is happening on the starting with the- CapEx of agrochemicals, if you can say. Sir, I understand. Sorry, I understand. I should have clarified in the question. I mean, CapEx of agrochemicals, how do you see that, sir? On the pharma- CDMO pharma is also only 2% kind of growth, so, you know, X of that, how do you see? Pharma CDMO has multiple challenges to address. One is definitely, as you understand, we have to depend on the customers' growth, and customers will eventually depend on the clinical success of the molecule. Number 2, we also look at some of the stock and inventory optimization levels. So these are the two important phenomena. It's very hard for us to really predict when a phase 3 molecule can be ready for a readout and followed by the NDA filing and approval. Hence, we stay relevant to our customers and wait for them to have a successful clinical closure, which normally takes anywhere between 1.5-2 years' time. That's why we are not able to exactly define what will be the terrain at which the success comes. At a broad level, you are still not in a position to give us any indication about what does that medium-term mean and how many quarters we still, you know, go through these challenges, right? Is that right? Yeah. That, that's- Uh, just- From a CDMO on a YTD basis, it's at 24%, is the number. I think it's not 2%. Just wanted to clarify. YTD, yes. Sir, just one clarification. Sorry, I misunderstood. There was a question, Q3 of FY 2023, there was no COVID molecule, right? No, no, I think, there is a clarification. Q3 of previous year has a COVID molecule. It is there in the base of the COVID molecule. Right. So I, that is what I also coming, because your reference just went a little bit high. That is why I got confused. You are correct. So Q3, FY 2023 had? Yes. Yes. Okay. So last question from my side. Now, we have been trying to move the business, which, I mean, apart from the CDMO and agrochemicals, we have been trying to enter into intermediates and, sorry, the API chain also, and there was a more integrated kind of play for us. Where are we in the discussion stage with the client, or is that still there, or is it only gonna be mainly after the merger happens, or is it somewhere which... You know, how do we see that in the aspect of business playing out over the next one year? Currently, Mayur, there is one active project for graduation from a registered starting material to API by one of the innovator company. The project is still active, but as you understand, it has to follow through certain procedures, including quality checks and also a customer visit to the facilities. It is active, but we cannot exactly decide by when it will be over, and it will be converted into commercial. Second part of your question, you are also referring to: Can we convert that into formulation and be a forward integration? We don't expect even in the midterm also that is going to happen, because we as a country don't have a precedent of providing formulated product to innovative companies. I hope it clarifies your question. Right. Right. Okay, sir. Thank you so much. Thank you, Mayur. Thank you. Participants, you are requested to please press star and one if you wish to ask a question. The next question is from the line of Ashish Soni from Family Office. Please go ahead. Sir, in the opening remarks, you spoke about some M&A activity and some RSU discussions. Can you throw some better light on it? Just want to understand in detail what are your, our thoughts there? There are two parts you mentioned. One is on the M&A side. As you understand, we have surplus cash in the balance sheet. As a part of our overall growth strategy, we are also evaluating potential possibilities of inorganic ways to expand and accelerate our growth aspirations. Currently we are actively pursuing and looking for few technology platforms which can differentiate our sales from the existing crowd and also stay very relevant to our existing customers. That activity is happening right now. And what about this RFQ? Like you said, that our RFQ pipeline is increasing, so when do you see some impact over revenues, maybe 6 months, 12 months, can it grow from like on that just? Yeah, as you understand, RFQs definitely, we have seen improved inflow, but as you understand, it takes time for RFQ conversion by the customers also. We expect in the next 1-2 quarters, some of the results should come in. It will not take more long either way. Whether we win or we lose, we will get to know in next 1-2 quarters. That's a common cycle that we follow. M&A, when you said you are exploring for inorganic opportunities, so do you see something closing in next one year? That is the aspiration that we have, but we would not be able to create any speculation at this stage unless we are clear. But definitely there is a healthy pipeline of M&A opportunities that we are pursuing right now. Appropriately, we'll come back to all of you. A last question. You have done a lot of capabilities and capacity upgradation you have done in last few years. So when do you think we can optimally utilize to our strategic perspective in next 2, 3 years, this capacities what we have built or upgraded? So again, this is an ongoing exercise of current capacity utilization in the case of various units of Suven that we have. More importantly, Suryapet new capacity expansion has been one more addition to us. Currently, we are planning for in the next two years' time, we should be able to really bring this capacity to an optimal level. That's our internal endeavor. Today, we have enough capacity available for us. Okay, thanks. Thank you. Thank you. The next question is from the line of Darshit Shah from Nirvana Capital. Please go ahead. Thank you for the follow-up. So, on the M&A side, so now we understand we have INR 1,000 crore, roughly around that, amount, with us. So when you're talking about new technologies and platforms that we are looking at, so this is over and above, the board, content that you've probably got to kind of merge Cohance, also. So this is, over and above what we are planning to probably looking at Cohance and other relevant technology and platforms also. Is your understanding correct? Darshit, currently we are looking for what is the M&A opportunity which can be more meaningful and a strategic for driving the Suven growth is our top priority right now. Hence, your understanding is correct. Correct. And lastly, you've been talking about a five-year vision for the company. So when can we expect something to be out in the presentation for the investors? Darshit, currently it is at a draft stage. As you understand, last quarter call, we were mentioning it is work in progress, but definitely our teams have kept lot of effort, and we have reached to a draft stage. We are contemplating how can we really convert that into a final blueprint. Sometime towards the closure of the year, probably we can come back with some specific outcomes of the overall blueprint. Otherwise, we are at an advanced stage of closing it. Surely, so looking forward to it. Thank you so much. Thank you. Thank you. Participants, to ask questions, you may press star and one. The next question is from the line of Ashish Soni from Family Office. Please go ahead. Yeah, just regarding, I think you're talking about near-term weakness. So what's your CapEx plan? Are we putting that on hold, or do you want to still continue with that, if you can some throw light on that for next one or two years? Ashish, as you heard us consistently today, our endeavor is to deepen our existing relationship with customers and fill up the current capacity which is relatively sub-optimally used right now, then appropriately plan for the CapEx. That's how we are looking for right now, which means your understanding is very correct. Mid-term, we try to decide based on our overall strategic options, in which assets that we have to have a CapEx allocation. Any guideline on maintenance CapEx, which will definitely be required in next one year or two years? Normally, to maintain our facilities, we continue to have the CapEx, which we will... Historically, we have been spending. The same amount will go. I'm talking about more of a growth CapEx. We will wait till we reach to a certain stage of optimal usage of capacities. When you say optimal, is it like 50% kind of thing or, more than? So normally, above 50% is the right trigger point. As you understand, Ashish, the CapEx has two components. One is building a civil structure, second one is the equipment installation and qualification. Infrastructure of civil takes long time, hence, our trigger point is to keep the infrastructure of civil first, then wait for the product-level mapping and the customer-level mapping comes into play. So we decide after 1.5-2 years, once we reach to 50% of the capacity, we start building a civil structure. Again, in our business, our 80% is 100% of utilization, because we do not want to run with more than 80% of the capacity occupancy, because we will lose the flexibility to the customers. That's how we look at the CapEx decisions. One last question: with M&A, are you planning in India or outside of India? Currently, at least first few assets, we are hoping to have it in India right now. But again, we'll come back with specific answers. That she was also asking, you should allow us for some time. There is a healthy pipeline. We'll get back with specific answers soon. Okay, thanks. Thank you. The next question is from the line of Gokul Maheshwari from Awriga Capital Advisors. Please go ahead. Yeah, thank you for the follow-up, approximately. I'm just going to just, sorry to harp on this on the COVID thing. I'm just referring to your page 24 of the annual report, where, you have mentioned that, and I quote, "The growth is to be subdued owing to the one-off revenue from the COVID-related projects in FY 2022, which was absent in FY 2023. If we take these numbers out, the growth of the numbers align with their growth of business sentiment." So I'm just a bit curious and confused in terms of what base are you referring in terms of COVID molecule revenues for FY 2023? Gokul, let's take this offline because I have not had the opportunity to look at what you're looking at. Okay. This is page 24 of the annual report, which you may... I'm happy to take this offline, but I'm just quoting it, that is in your annual report, which is mentioned there. Sure. Thank you. The next question is from the line of Mayur Parkeria from Wealth Managers (India) Private Limited. Please go ahead. Okay. So thank you again for taking my question. Sir, just a follow-up on the last one because again it has cropped up. We would request you to kindly issue a press release if there is any change in the understanding we have. It will help us, all of us, because, you know, it will in terms of overall disclosure also. So if there is any change in the requirement, request you to kindly release a press release. It will help us. Secondly, sir, on the generic side- Mayur, if we can just hold for a moment. Can you just elaborate? We could not follow your request, please. Yes, sir. I was saying, referring to the last question, because, if as whether as far with respect to the COVID base, COVID drug base, there is some confusion. So instead of having, you know, only one analyst as offline, request you to if you can issue a press release if there is any change in your current disclosure requirements or something. It's more of a clarification. It doesn't have any materiality. However, we take your point. We'll ensure that there is no information asymmetry. Thank you. Thank you, sir. So the question actually I had on the, generic and the formulation side, there has been some uptick, which was seen, after, again, quite a long period of, you know, that opportunity not being met and our, tie-up with or our understanding with Rising Pharma, which is there. So, how should we look at that, segment from two perspectives? One is, are we going to now see a sustained, growth, coming up? And secondly, in the initial phases, are the margins on that a little back-ended as we, you know, the minimum sale, and then it, percolates down to the bottom line later phase? Or does it achieve a more evenly spread as we go ahead overall in terms of segments? If you can just give us some understanding of how we see that in the next, one year or so, as far as this formulation in the, is concerned. Thank you. So I'll try to divide this question into multiple pieces. One is definitely the extent of commercialization of some of the filings which have happened in the past. We see progress happening right now. And as we speak, even last quarter, which is Q3, ending December of 2023, we had 3 ANDAs approved related to 2 products. And we also seem to have the commercialization also of the molecules happening. And the way we look at here, last year, it was Casper Pharma actually making a loss, and this year we expect loss can be minimized. And next year, definitely based on the extent of commercialization of this approved ANDAs, definitely loss-making to a profit-making will always happen. Number two, in terms of the margin, it always follow the revenue, and in some cases there is an extent of composition of profit share happens in the business. On approval basis, it also gets recognized. However, this is, this is a continuous ongoing activity. Obviously, it will recur going forward. These are the two points. I hope it answers your question. So, sir, current set of molecules which have gone into commercialization are more evenly spread on margins, or they will as a profit share, current set which we are seeing up to? Difficult to say that, right now, but definitely the composition has both. Composition of molecule comes with both, hence, margin also will be evenly spread. That's what I'm trying to say. Okay. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. Ladies and gentlemen, I would now like to hand the conference over to Ms. Cyndrella Carvalho for closing comments. Over to you, ma'am. Thank you, participants, for your time. Any questions unanswered, please, please reach out to the investorrelations.pds at your convenience. Thank you so much. Thank you. On behalf of Suven Pharmaceuticals Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.