Hey, and welcome to Gland Pharma conference call on proposed acquisition of Cenexi. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity to ask questions at the end of the management speech. Joining us today from the Gland Pharma Limited management team is Sumanta Bajpayee, Vice President, Corporate Finance and Investor Relations. I now request Sumanta Bajpayee to begin the proceedings of the meetings. Thank you, and over to you, sir. Thank you, Faisal. Good evening, everyone. A warm welcome to all of you to discuss about the potential transaction with Cenexi Group that we have executed the put option today. To discuss on this and give you the clarity about the strategic objective, I have with me Mr. Srinivas Sadu, Managing Director and CEO, Mr. Ravi Shekhar Mitra, our CFO. Before we start with the call, please note that the safe harbor language contained in our press release is also applicable to this call. You also please recognize that some of the statement made in today's discussion will be forward-looking, so please consider that with the industry risk and uncertainties. Thank you all. I now request Mr. Sadu to start the call with his opening remark. Thank you, Sumanta. Good evening, everyone. I'm glad to welcome you all to this conference call organized to take you through the proposed acquisition of Cenexi. As you all know, this is proposed acquisition will be our first international acquisition, and it will perfectly support our deepening access into the European market. This acquisition will help expand our global presence and also solidify our presence as an injectable-focused CDMO company. We see exciting energy, synergy opportunities from leveraging our combined sterile expertise and development capabilities to expand our customer base and increase our share of wallet. The acquisition will not only act as a sustainable lever for long-term growth, but would also establish as a leading European platform to enrich our offering and increase value, add to our customers. I will run through the presentation quickly so that, you know, we'll want to give you a better understanding of Cenexi and how it will add value to both the companies. Thank you, sir. I'll project the presentation. The same presentation is also available in the stock exchanges for your ready reference. Let me start by walking you through the strategic rationale of the transaction. As you all know, we did lay out a strategic roadmap a few years ago, where Europe was also a part of a growth strategy. This acquisition will solve for the strategic objectives of Gland. It not only expand our CDMO footprint, but also it expands, accelerates our product portfolio into the European market. If you see the Europe market, you know, in terms of the offerings, what Cenexi gives, it's about $4 billion in terms of CDMO services in the DMF site. Globally, the offerings they do, you know, captures about EUR 20 billion. They have a great manufacturing presence in Europe. This will also gives us access to these manufacturing sites where we can actually release some of our products moving forward. It also gives us technological access, which we don't have today. They have a technology in terms of ophthalmic gel. They have needleless injectors, fields where, you know, we can develop more products. Also have development capabilities and also manufacturing capabilities to make some suspensions and hormonal products. This will increase our portfolio in the future as well. From a manufacturing perspective, you know, they have three manufacturing sites in France, one site in Belgium. The Fontenay site in France, historically, it's been a Roche site, and this manufactures a lot of ampules and also the capability of PFS and vials in other sites. All the sites are approved by FDA and also they have several regulatory approvals. The current business in sterile injections is over 70%, which is expected to grow to 82% in next few years. With the Gland joining hands, probably the focus on injectables will be higher, and I know the target to move towards more injectable-based CDMO will be maybe faster. They also have a solid expertise in terms of potent solids, which is again niche, and also they operate some controlled substances in their Osny sites. They have employees since about close to 1,400 people. They have out of this, about 120 employees are from the services, which help them technology transfer of products and also develop some of the products for their customers. If you go from the services perspective, they offer both manufacturing and develop services to clients. It has three development centers and large FDA capacities across dosage forms. Its business model is very similar to Gland, where, you know, they do the except the marketing and distribution, the API production and the basic discovery research. They have capabilities to work on the other aspects of the supply chain or the manufacturing value chain. The business integration should be a natural process because we are also in the similar space. Our own revenue share on the CDMO business will substantially increase because of this acquisition. The facility at Fontenay is largely focused on ampoules. They also have some capabilities in manufacturing, establish and capsules, but it's one of the largest ampoule production sites in Europe. The site in Hérouville has pre-filled syringe, vials and lyo capacities and also some ampoule capacities along with some sterile capabilities. The Aulnay-sous-Bois site is focused on high potent solids, hormones, and some double-layer tablets. They also have technology capabilities in manufacturing needleless injectors as well. What do the services do? The Cenexi development services business is highly synergistic with the CMO business and helps to offer comprehensive range of services from early to late-stage development to product transfer. This value-added partnership approach builds strong customer relationships and visibility of growth. Next slide. In our view, this transaction is a win-win combination for both Cenexi and Gland. Together we shall become one of the leading CDMO focused players globally. It will have an ability to further invest in nurturing the European platform. The combined manufacturing presence would offer much more options to customers, both from Gland and Cenexi's perspective, and it drive firmer relationships with clients. This will further help to explore ability to expand the product portfolio with our current customers. It'll also help us launch more products from our own portfolio through these sites in Europe. The development and manufacturing expertise at Cenexi with respect to cytotoxins and biologics can be scaled further once we come together. Our expertise on manufacturing products at scale with experience of different regulatory organizations and quality first approach, it will help support Cenexi and will help us to grow to the next stage of growth here, I would say. As highlighted, the customers of Cenexi are spread across specialty pharma and large cap pharma. For greater than 70% of customer portfolio as you see, Cenexi is the sole manufacturing partner. It has over 100 customers. They have several contracts with some biologic customers. The end product reaches over 120 countries. 80% of revenue generated in last five years are there with them for more than five years. They serve these customers from the multiple sites at multiple projects. Over last two years, the focus has been to move towards high value, large margin, high margin products. Historically, it's been a ampoule-driven business. For the last two years, you have seen their move towards pre-filled syringes, lyophilized products, as well as some highly technical products, including suspensions and hormones. Next slide. This is a slide which shows the historical financial numbers. CY 2021, January to December, the numbers are INR 184 million as revenue and INR 23 million EBITDA. The first half of this year, they have done 100 million of revenue and 19 million of EBITDA. The enterprise value agreed for this acquisition is EUR 230 million, which comes to an equity value of EUR 120 million. The transaction will be funded by internal resources with no recourse to third party funding. I'll be open to take questions on the asset and anything related to business and how it help benefit Gland to grow in the future. Thank you very much. We will now begin the question and answer session. Anyone who has a question may click on raise hand button. The operator will announce your turn in the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The first question is from the line of Ankush Agrawal from Surge Capital. Please proceed with your question. Yeah. Hi, sir. I hope I'm audible. Yes, you're audible. Please proceed. Yeah. Congrats on the acquisition, sir. My first question is, just trying to understand the business a little bit better. Cenexi is basically, you know, they offer end-to-end from development stage to commercial manufacturing for the end customers. From the presentation, what I see that, they are not into API manufacturing. I wanted to understand would Gland, given that we have some API manufacturing capacities, do we believe that we will be supporting, like we will be, you know, kind of adding that to the value chain and, you know, leveraging that to increase the value? If you can highlight that. It could be one of the synergy aspects, I would think. currently, Cenexi is a fully finished product, company, and, they don't develop on their own. It's a CDMO company. Okay. Either they do technology transfer from other companies or they do some development work for the other companies and then they commercialize in that site. They can always offer if somebody is looking for, or they can offer APIs from our sites if they wanted to, so that, you know, it could help them in whether it could be some margin profile or, you know, help them the companies which they're serving. That could be one absolute advantage with the company can acquire, yes. That is not a near-term, like, part of the strategy, right? It could be in the future. It could be, once, you know, once closing happens, then we need. Yeah. When the customers work, you know, the products have to be common, then once it's in a portfolio or if it's there, we can always join. Yeah. Okay. Secondly, second question is, would you be able to give some broad color on how much of the business is, you know, innovator-led NCE and how much is generic? Within the innovator-led CMO part, like how much of the business coming from the development, which is the services business and how much is the commercial manufacturing? A broad color. If you look at the revenue perspective, the services business about EUR 25 million, EUR 20 million, 25 million. Okay. you know, The only the biologics place they are working with the novel companies on the novel molecules. Okay. Most is branded, generics, I would say. The companies who have launched these brands over many years. Development or 200 sites. These are the company, so Cenexi acts as a manufacturer for these brand companies for their branded generics. Okay. it's entirely generic CMO, is your saying? It's a combination of both. They also do some development for work for some biologics companies who are working on newer molecules. Okay. From the finished product side, from the regular products, it's branded products, branded companies, but for the branded generics. Branded generic. Got it. Got it. That was very helpful. Thank you. Thank you. The next question is from the line of Saion Mukherjee. Please unmute your audio and proceed with your question. From Nomura. Yeah. Hi, good evening. Am I audible? Yes. Yeah. Thanks. Just, can you provide some brief background about the company, the management there and the current ownership and, you know, the continuity of the management, you know, post the transaction? Yes. The current ownership is private equity, Cathay Capital. Management is there for many years. I mean, culturally, it looks similar to Gland, I would say. You know, many people are there for many several years. We do have a management incentive package as a retention. A good thing is, like I said, a lot of people are attached to the company from the previous owners. You know, the private equity has taken over from a motor-driven company. The people are in line. I think they are aligned to stay with the company for a while. Yeah. It's 100% private equity owned at this point? Yes. Okay. The second, you know, the strategic rationale for having presence in Europe, for you know, a branded generic, service company. I think, you know, we are seeing a lot of issues in Europe, and typically the talk is that manufacturing is shifting to, you know, places like India, for instance. In the current context, why you think a presence in Europe is required? Why not in India? You could... I mean, what do you get as part of this acquisition, I mean, which you could have built organically as well? We've been saying actually, you know, to launch your products into the Europe, you need to have a local site. It's more expensive to transfer products there. You need to have a local release. You should have a local testing done before a product is released. If you see most of the Indian companies as well, they have a manufacturing site. One is your base itself, you know, your own portfolio can be launched into the European market through these assets. One. Today, if you look at our revenues, it's a mix of CDMO and our own B2B generic space. This will add to a solid CDMO business, where the clienteles are there for many years. It's a sole supplier for a lot of companies, who are large in nature. The branded generics, what they're doing is not like a normal generic like this. You know, many companies in Europe, still there's a substantial chunk of businesses lies with the branded generics like India. These are the brands which these guys manufacture. More and more they're moving towards the high-end kind of CDMO business. It gives access to the market to take our products into the market. Also, it is also giving us the customer base, which Cenexi has, and also some of the technologies which we don't have today. You know, whether I was talking about needleless injectors, ophthalmic mixtures. They also manufacture suspensions, they also manufacture hormones. There we don't have today. These can actually help us in developing some of products what we have. Avoid some of the investments we can make actually in India. They already have a knowhow of manufacturing, so, you know, we can develop those products as well. It's several things actually we can get to this acquisition. Yeah. Thanks. Just last one. Is there any product or customer concentration that you would like to highlight in this business currently? No, it's spread across a lot of customers. That's a good part. Last few years, the customer base has increased drastically. If you look at the development services, revenue has gone up also in last two years. There's a, there are efforts made to move this business just from ampoules to other products and other technologies. That's why you're seeing this lot of new customers got added in last couple of years. The profitability of the business also has increased. Okay. Thank you. It's better question. Yeah. Yeah, thanks. Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please proceed with your question. Thank you for taking my question, sir. Sir, if I look at the, you know, revenue numbers that you've put in the, you know, PPT, you know, the revenue has been fairly range-bound for this company. Given what you're saying, is there scope to expand the Cenexi revenue base from the existing manufacturing facilities, you know, other than the fact that we can launch the Gland own products, et cetera, you know, can this revenue, in your view, be meaningfully higher? That's my first question. Second, if I were to look at margins in the first half of CY 2022, there seems to be a very sharp jump. You know, is this sustainable? Has something changed, you know, in the business, you know, to report such higher margins year-on-year? If you look at the history of this company, right, you know, when it started from Roche, most of the business was ampoules, which is a low, low margin business. That's been the focus for many years. It started to shift from, I would say, last three years, you know, when they acquired the Hérouville-Saint-Clair site in 2017. The other sites, they started investing into the new assets. Now a lot more products are moving towards the areas of syringes, Lyo, suspension products, these kind of products. That's one of the reason you also see the development service income has gone up in last two years. A lot of these projects are getting into fruition stage now. You know, some technology transfers are happening, which will get commercialized in next year or so. We would see because they're moving away from ampoule business, there's a loss of that revenue, but also there's addition of other revenues which is coming from other sites. From revenue perspective, we know that's a shift that has happened, which is good in a sense because they're moving towards the higher value products and more different products to make. The three sites other than the Fontenay, they have a lot of scope to make addition investments and expand capacities and capabilities. The projects we are currently doing, I think there's a lot of scope to grow. With the customers base we have created over last three years, I think there's a lot of scope to grow. We also need to look at not just as a standalone basis, but look at as a together as a Gland, then what all can we do because now they have. You know, they have access to our own capabilities, which if they want, they can agree. We have our own customer base who have a presence in Europe, but currently they're not taking products from us because they're currently sourcing from other contract manufacturers in Europe. This will also help us, you know, opening up discussions with our own partners. It's a win-win for both in a way. They'll have access to our technologies, quality and our own customer base, and we'll have the same thing. Just to add to that, you know, the half year number should not be annualized because there's a seasonality attached to it. If you see over the journey over the last three-and-a-half years, the margin percentage has been increasing for the reason Srinivas was just explaining. Mm-hmm. That shift in the product mix and moving towards high margin and high, complex and high quality products, more to the sterile side. Understood. Just to follow up on that, what would be the average capacity utilization, sir, for the facilities that they have there? You know, does it require incremental investment, you know, if we have to launch more Gland products through those facilities? Fontenay has capacities which are, I think, running at peak. It's an ampoule production site mostly. We will invest into new automated lines. You know, that could increase the output and the yields and efficiency. We have several levers which were identified during the six, seven months journey what we have gone through them. In other sites, I think we need to add some capacities because for the next growth we need to add, you know, some investments to increase the capacities, whether it's lyophilization, or some vial capacity we should increase. That will help them grow in the next curve because a lot of development projects they're taking up, once they get approvals, you know, in a year, 18 months' time, that's when it will start fruition. While the capacity plan is still not high in other sites compared to Fontenay site, you know, that will still take care of 12 to 18 months. Still we start looking at because it's a long term when we have to invest. They have enough space and area to expand. Thank you, sir. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please unmute your audio and proceed. Yeah. Hi, good evening. Am I audible? Yes. Yes, yes, Prakash, go ahead. Yeah. Hi. First a clarification, why it says, you know, put option and you also said it's a proposed. Are there any legalities, regulatory approval required, or what are the approval that we would be needing? Yeah, it's a regular French approval process. Its first step is put option agreement where we also agree on all the SPA terms, but it is not assigned. It has go through a works council clearance where we have to share the SPA document, what are terms, what we agreed, they'll review it. We should give them 30 days time. It's not approval process, but it's an information process where we have to give them that 30 days time. The SPA will be signed. We have to go through the normal FDA process in France. The estimated time is around March, I would say, February, March. Pretty close. Okay. If you could share, you know, a little bit more on the financials, like the gross margin of the business and the tax rates. Gross margin we cannot share at this point of time because, you know, that we'll be sharing post our closing. On the tax rate, they are at the marginal tax rate which I think is about 27%. You know, why I'm asking is I'm trying to understand what are the key levers of EBITDA margin improvement? Could it be gross margin itself or it could be more on the operating cost side? If you could help us understand, because you are sitting at a margin of 35%, you acquired an asset which is, you know, half of yours, currently. I'm sure you would have looked at a lot of cost synergies to play out. If you could expand on that? Yeah. I think it's a combination of a few things. One is the operational efficiencies. We identified a few things where something can be automated, where efficiencies can be improved, especially on the Fontenay-sous-Bois site. We always say in injectable, there is a break-even point above which whatever you do, revenues adds up to your bottom line. I think that's what we are looking at. Any additional revenue which hits these sites will be added EBITDA margins to it. Most of it gets to the bottom line. You was mentioning about other sites where there's a scope of improvement of margins. Once we start launching more products, once we start taking more projects, most of it will flow through the bottom line. That's how we are looking at this asset. What would be the peak EBITDA margin that you would be looking over two, three years? No, no, we will not comment on that at this point of time. Okay. Improvement is possible is what you're saying. Yeah. Absolutely, yeah. Okay. Last one, if I may. Seasonality you mentioned. Is it like, you know, normally is the December quarter, the season, but for this business, which quarter or which half is the higher season, if you can clarify? It's a CDMO business, so they don't really go by the seasonality. You know, at least we have not studied, honestly. It's Jan to December calendar year for them, members-wise. Probably or anyway we will, by the time we consolidate, it will be first half of next year, financial year. But, I think it all depends on when the projects are transferred, the technology transfer, when did it happen. You know, there's various factors which impact which quarter its revenue is recognized. Yeah. You shouldn't annualize that. That was the point. Even they have August and December is lighter on terms of productivity and production. Okay. Got it. Fair enough. Thank you and all the best for the acquisition. Thank you. Thank you. The next question is from the line of Nithya Balasubramanian from Bernstein. Please proceed with your question. To start with, you can give us a little bit of color about the biologics CDMO, in terms of capabilities, capacities, customers. Their website does list a fairly long list of technologies that they can do. In terms of if you can just give us a bit of color around that. From biologics side, they're currently only doing the finished product. They have contracts with three companies for taking some clinical batches. Some I think have already gone for clinical phase. They have access to some of these players. They're also discussing with four or five other players to get in line with this. From currently they don't have any drug substance, so probably this will help us into getting that space where we're going to add value to it. From other technology perspective, they do make some suspensions, hormonal products. They also make the needleless injector products. They have agreement, I think exclusive agreement with seven or eight products with some company. That will give access to us for our own products where, you know, we can develop those products in that technology. It also gives us access to some of the ophthalmic sterile gels. We have regular suspensions and solutions. We don't have gels. That will give additional bandwidth for us as well from technology perspective. Understood. You had mentioned in various forums when talking about what type of M&A you're looking at, you were actually talking about fermentation API capacities, controlled substances potentially in the US, technologies. I think microsphere was what, or, you know, some of those complex injectables is what you were alluding to. The asset you have now picked up doesn't really fit into these three buckets, right? How does this make sense given what your original priorities were? We didn't mention about expanding into Europe as well. We did mention that to take our portfolio to Europe, we need a local asset, that will add to that. Also from technology perspective, they do have, like I said, some suspensions, products like testosterone, where we don't have those capabilities, it will add from that angle as well. To launch our own products into Europe, we need these kind of assets. We did mention in our roadmap one of this. They also make actually controlled substances. This asset has a line where they can make controlled substance as well. At least it solves for European CDMO, where we can make these products. I missed to mention that actually they do manufacture some controlled substances. You wouldn't be able to sell into the U.S., right? To be able to- Not U.S. Do so you need a- Yeah, mostly Europe. Yeah. Would the other assets that you were still keen on, do they still remain priorities now that you've done this acquisition? They still remain priorities. We are looking at assets in those areas. Like, you know, in the last year we were very, the market was very volatile, so we're still actively looking at other assets as well. This is just a starting. Thank you so much and all the best. Thank you. Thank you. The next question is from the line of Kunal Randeria from Nuvama. Please go ahead. Hi. Hi. I hope I'm audible. Yes, sir. Just a couple of questions. I think you briefly touched upon this. Would there be some sort of manufacturing reject, like some low-value items to be shifted to India and then some new innovative products at EU plants? In the absence of this, I don't really see a lot of commercial or cost synergies coming. Like you said, you know, for a lot of European customers, you know, their sourcing of products mostly happens in Europe. You know, not many companies in India are actually manufacturing products for European region. There are a couple of reasons. One is they're still a closed countries. The other is the cost of making it here, transporting to Europe and doing a local release is more expensive. Most of the production is happening for the European clientele, for the European market is local. That's one of the reason you see even the customers whom we have, U.S. and other markets, their European business stays in Europe. This is one of the one of the steps towards that, to get that kind of clientele where they're looking for local base. That do add benefits. You know, they have access to the branded, generic products from Europe. Again, unlike U.S., where once the product is genericized, brand completely goes away, but Europe still have a substantial portion of branded generics, you know, like in India. We are entering into that space where, you know, we can cater to that need as well. We talked about technologies where we don't have, where we can actually start working on some of the products where, you know, we were reluctant to invest in because of a few products there. We can use their know-how to make these kind of products there, these products for U.S. and other markets. Of course, the synergies will always come up in terms of, you know, whether some of the APIs where somebody was asking, can we add future? Yeah, there are synergies on that. In terms of efficiencies, how to improve, I said. You also see a lot of these plants are automated compared to India, there's a lot of learnings in terms of how they run the plant, how we run the business. I would say there are a lot of synergies which will happen in terms of operational things, but also from business perspective, whether we launch our own products in Europe, whether, you know, getting into a space where we don't have the customer base, most of it is completely new, we're going to have access to those customers. They're not just selling in Europe, they're also selling in outside Europe. They're selling in Asia, they're selling Japan, selling China. Now with this clientele, we can also use, you know, can we get our products to this clientele to other markets. There are other areas where we can actually focus on to increase the standard business, what they were having today. Sure, sir. Sure. If I were to just maybe just push a little bit on this. 38% of the revenues come from ROW and Asia, so I assume most of it would be emerging markets and maybe there could be some... because regulatory requirements there would be lower. Would that manufacturing part of it maybe, you know, at least one where you have the technology can be transferred or even that's not possible? Just to clarify. See, most of the products they don't sell directly in these markets. The clientele are mostly Europe. The products go to these markets. These companies have their branded presence in these markets. You know, like a brand company selling their brands in India. They might make the product for that company, but they're selling in India. It's this kind of a business. The end product reaches their emerging markets, but they are high-margin products. The customer is same, the product profile or the margins are same for the Cenexi. Sure, sir. Just one more. Sir, your sites, if you're FDA-approved, and why is the U.S. contribution at the moment maybe just, I think, 1%? Pardon? sir, your site is FDA-approved, right? All your sites. Yeah. The US contribution, I think, is just around 1%. You mean the Cenexi? Okay. Currently their focus is completely European clientele, that's what I'm saying. currently their focus is European clientele. Most of their business is coming from Europe. Although it's approved by FDA, but the focus has been to cater to the European needs. you know, we also need to see how effectively they can supply to Europe in terms of cost and all that, where, you know, Indians and other companies can sell. this company is focused on supplying companies for the European base as well as other markets where there's a branded generic businesses available. Sure, sir. Thanks. Just one more, if I can squeeze in. Sir, in the revenue that you mentioned, for Cenexi, any COVID element over there may be, I mean, one-off kind of sales? No, they are not, no. We don't have any COVID products. Yeah. Okay. Thank you and all the best. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead. Thanks for the opportunity. Just on the financials first, if you could share, what is the gross block and the working capital days for this business? Yeah. The gross block is about EUR 90-plus million. Okay. Which is, they have invested across, also ramping up the investments in these facilities as we have been talking about. On the, on the working capital, we'll not comment on the day side, but, you know, they have normal level of working capital, which a normal CDMO players, and that Europe maintains. There's not much fluctuation also. I think working capital, I would say it's a stable working capital they have. Maybe except the containment site, other sites have got what kind of capacity utilization? I would say around 30%-35%, I think. has this been, like, historically similar kind of capacity utilization or it's been-? Most of the capacities have come online last couple of years. You could see they were acquired, I believe it was in 17. It's five years ago. They started adding lines and different capabilities. Some of are specific to certain companies, certain products. It's added up. I think over the last few years they've invested into this capacity. Just from the business model, is this also having a cost-plus markup kind of business model or is there a profit-sharing element as well? I think it's more a transfer price model. They don't have because it's all local CDMO business, so they have a cost-plus model. All right. Thank you. Thank you. The next question is from the line of Abdulkader Puranwala from Elara. Please unmute your audio and proceed. Yeah. Hi, sir. Thank you for the opportunity. Sir, just wanted to understand the past financial track record of this company. As you previously said that 90 million is the gross block acquired, and then there is some amount of debt of to an extent of, say maybe $110 million. Just wanted to understand what led to this debt pile up. You know, considering that they are quite profitable at 10%-12% EBITDA margin. Yeah. You know, typically in France, these are run on a, by privately on a LBO model. That's the reason, you know, all the debt is on the company's balance sheet. Our capital structure is definitely going to be different than the LBO model. That is how we see the net profitability increasing from the previous past record. All right. Secondly, on the regulatory track record. The Fontenay site, I believe they had some OAI in way back in 2015. Some color on, you know, how the regulatory status has been. North America was just 1%, but in future, if we have to use this site for, you know, for certain manufacturing, you know, just to get some glimpse on that side, sir. Fontenay site is mostly abuse. Not much actually happens for U.S. market and the markets. It's been addressed and currently it's a FDA approved site now. Most of the production actually happens from the other three sites for other markets. Fontenay is mostly albumin driven market for local for European market. Got it, sir. Thank you. Wish you all the best. Thank you. The next question is from the line of Kunal Dhamesha from Macquarie. Please go ahead. Good evening. Thank you for taking my question. First, just a clarity on the access to the Europe market. Does this mean that you would utilize those, whatever is required in terms of access, maybe the testing purpose, but the manufacturing for Europe market would still happen in Indian facilities? That's one of the area, one of the ideas. Yes. Like I've been saying, either we have to repack in Europe and then release in Europe, so that will be economical. That's one of the growth drivers I would say. In addition to the access to the customer base of Cenexi and, you know, giving more products from even, we can give our products to those, that customers as well, as well as they can actually use our customers base to get it. Even our customers whom we have a relationship with, in Europe, in U.S. and other markets, they have presence in Europe. Even that, manufacturing can actually happen in Europe where they're getting currently done in other sites. Let's say if we want to launch any product in Europe, from our current portfolio, would we be doing it directly or we would approach some of the customers of Cenexi to launch those products? It could be a combination of both because, the, some of the customers have their own marketing network within Europe. We can look at using their network. If they're interested in some of our portfolio, we can use them. Some of these companies have actually acquired some brands from big pharma and then selling in Europe. They, you know, they could be some of them could be our customers. And also the sites can be used to pack and release our products as well in the future. Is there any ballpark number of, you know, from, let's say, your, and I assume that you can only launch your own ANDA, which you have developed in-house, in the Europe market. You know, what could be the addressable market size of actually the products you have currently under your portfolio for the Europe market, you know, maybe over three years? It's too early because, you know, whatever we sell in Europe and U.S. may not be just translated directly to Europe. We have to analyze which products which we can take there. It's just a start. Yeah, sure. Last one on, is Jelmyto a big product for this company? Which one? Jelmyto. Jelmyto. It's Mitomycin gel. Yeah, that is also one of the products. Yeah. Is it a big product over the last couple of years? I can't comment on the size of the product, but yeah. The margin improvement that we are seeing is not a function of that? It could be a function of many things, you know, because they have a whole bunch of transfers which are happening even today in terms of newer products, which will be launched in next 12 to 18 months. It could be a function of many other products as well. Sure. Because- Thank you and all the best. We cannot really get into brands and the products and all that because there are also some confidential restrictions. Like I said, they're working on a lot of branded products, so. Okay. Okay. Great. Thank you and all the best. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Please unmute your audio from your side and proceed. Yeah, sure. Thank you very much, and a very good evening. I just wanted to check, first of all on the return on investment on this, because if I do some back of the envelope calculation, it looks like it's a sort of a single-digit, you know, ROI versus what you do in 20-25%. Is this the best use of your capital, or how can you unlock value? Right. You have to look this as a, you know, integrated basis and, this is definitely synergy, is driven acquisition, not a standalone basis. When we have evaluated this we have definitely, relied on what synergy and, you know, additional growth levers they have, and may not be a reflection of their past, financial numbers. We have, gone by our historical and internal threshold of 20% IRR, and that's how we have looked at the acquisition. Sir, when you say that, you mean to say that over time, this will also yield you the number that you just said, 20% or so, ROI. Which probably means $40 million-$50 million net profits. Do you think this is even possible? Yeah. there is definitely a, you know, a lot of opportunity to scale up and, with the synergy we have been discussing about. Yeah, I'll not comment on a number now at this point of time. Yes, the IRR we definitely have looked at is basis of all this. Sameer, just one point here. When we refer IRR for internal threshold limit, it's not a project IRR. We always consider equity IRR. That is our internal just for additional layer of clarity. Because in this, there's a capital structure efficiency possibility is obviously there, which we will evaluate once we complete the entire process of culmination of all the pending item. Definitely we looked at from the perspective of equity IRR. Okay, got it. sir, second question is, can you share some thoughts on the bidding process? Was it, you know, open process and there were many suitors or how did you come upon this? Yeah. You want- Basically the process being run, Jefferies was the sell side. We have disclosed that. Jefferies ran the full process. There were participant from the private equity as well as strategic guys. Eventually we decided to take this forward. Okay, got it. If I may, one or two more. Can you talk about the site wise revenue split up? Is there some very big ones and some very small ones over there? I think the Fontenay side gives about 70. Yeah, 80. About INR 77 million, INR 78 million. That's the large side. The rest comes from the other three sides. Like I said, the other three sides are newer sides where they have invested in the last couple of years. That's where the most of the new projects are happening. Those will grow in numbers in next 12 to 18 months. Okay. Sir, one final question from my side. You did talk about a very fragmented customer base, but just to be very sure, what's the top contribution from top three customers and top three products, if you can just share. Any rough number would be okay. We can come back to you. Right now it is not available with us. Okay, that's fine. Yeah. Actually, Sameer, one very critical point here is we are talking about the CDMO. The entire business model based on the customer and contract, where that is most important than the product. Capabilities we judged. In those capabilities, what kind of product that they can develop and execute, that's what is the main criteria we evaluated other than getting into product. If the customer and contract is there, product will come. Okay. Can you talk about the top three customers in that in that case? That's little bit of color is available in the presentation itself. You can see it. It is available in the presentation. Like Organon and Roche, and I think Cipla, they are good. Aspen, they have a good set of products. I would say these are the top customers for them. Okay, sir. Great. Thank you so much. Thank you. The next question is from the line of Vishal Manchanda from Systematix. Please proceed with your question. Hi, good evening. Thanks for the opportunity. Can you share some color on the pipeline of Cenexi? Like, how many products that are manufactured, that's going to be manufactured by Cenexi are undergoing regulatory review? like I said, you know, they're not a product, company, right? They're a CDMO company where they develop, or do technology transfer for other companies and they manufacture for other companies. They don't have their own pipeline of products. What I mean is basically registered by third parties. Cenexi is the manufacturing side that's part of the ANDA or NDA submission that the partner makes. We can give you granular details offline. I think, Sumanta can give you that. When there's an appropriate thing, we will do a stock exchange disclosure to avoid any selective disclosure chance. Okay. Thank you. That's it. Thank you. The next question is from the line of Vivek Agrawal from Citi. Please go ahead. Yeah, thanks for the opportunity. Sanju sir, can you also talk a bit on the addressable market? You have highlighted that it's around EUR 4 billion in Europe, how that is growing? That is the first part of the question. Is it possible for you to throw some light on who are the competitors, the major competitors that Cenexi is competing with at this point of time? Thank you. See, when you mention EUR 4 billion, it's specific to currently the process forms, what they're offering. The EUR 4 billion are there for the European market. That's specific to that. There are other areas where they can be done. You know, we talked about Gland selling its products, launching its products. That's completely different. Absolutely. Products which can go out of Europe, from this network, that could be a different market. It's very difficult to tell like that. If you look at competitors' perspective, you know, there are, I think, over 100 companies in Europe which are offering different services from high-end to low-end, you know. From Recipharm to Lonza to, you know, Vetter to a lot of smaller companies that are there. All these are in a way competitors to us. It depends on which specific area the CDMOs are focusing on. Some are focusing on biologics, some are focusing on this. Cenexi is focusing on branded generic portion. Historically, it's been APIs and some of the other products. Now they're also moving towards the high-end products. That's what I could... Yeah. Thanks for the clarification. As far as the growth is concerned, do you depend on the new launches on a consistent basis? Or is it that the existing products also have some potential to grow from here on? How do you look at it? Some of the products, you know, like any usual CDMO business, you signed a contract with somebody, you know. Once their market grows, your production also grows up. There's a potential to grow if the products what they're launching with the customers, once they grow, you know, naturally they also grow. There's how many projects are transferred to your own site. These are newer additions to your business. It's similar to Gland, where we do a lot of technology transfers from other companies. Today, we talk more about Gland selling its own products. Actually, you know, if you look at CMO, CDMO, it's a different, tech transfer projects that we do. We always see on an annual basis how many projects we transfer, which gets translated to commercialization in a year or 18 months. I think that's what they're doing. A lot of projects are getting transferred to Cenexi sites. The newer platforms what they have developed in last two years, that's where we are looking at rather than historical APIs business, which is a smaller. Technically, it's not that difficult business, I know that's why the margin profile is also shifting. That's where the growth results are coming from last two years, that's what attracted to us. What is that it's giving Gland in terms of what kind of products I can launch in Europe, whether they have capabilities to do it, whether the sites have regulatory capabilities, quality standards, which can help us to take our products to that market. The other is, you know, a technologies where I don't have today capabilities. It takes years to learn some capabilities. They do have manufacturing capabilities. suddenly I can develop some, a bunch of complex products which we can manufacture there. That's the other thing. the customer base. You know, this customer base in Europe is completely closed. You know, normally these customers generally get products from European manufacturing sites. now I'm opening up that area where I don't have an entry all these years. Currently, my business is outside Europe. I have a customers who have... we can give more offerings to these customers because of our capabilities in India as well. that's one way, you know, we are also expanding that business. there's several, I would say, you know, levers which can give drive growth. We should look at this asset not just as a standalone company, but, you know, after integration in, you know, 14 to 18 months. Of course, we need to do planning and which products to take to the market, which are the customers, what they're asking. All that integration will happen in next, you know, 18 months. In the long term, how much return this asset is going to give us. There's a solid base which is giving us. We are not going there with a zero revenue now. We have a base, we have a manufacturing site, already it's been established, team which is there. Now, what all we can jointly do to increase the profitability and revenue share for this company. That's how we are looking at this, yes. Thanks, sir, for the detailed answer. Just, last, thing, if you can, help us with. What's the current, number of depreciation, if you can share? Sorry, what is that? Depreciation. Can you share the depreciation number? Their depreciation number would be about INR 10. Thanks, sir. That was from my side. Thank you. Thank you. Ladies and gentlemen, please limit your questions to two per participant. The next question is from the line of Prashant Nair from Ambit Capital. Please proceed with your question. Yeah, thanks. Can you know, give a sense of whether there's any product overlap between what you currently sell in Europe and their product portfolio? Is it, you know, mostly complementary? I don't see any products, at least, you know, from the analysis what you have done now, there's no overlap. We have to look at, you know, that's a CDMO business, whereas ours is more our own product. Even if there's overlap, that's not a problem because, you know, like, we do a tech transfer B2B CDMO business, but we'll also do the same molecule for ourselves. It still is not considered overlap. As far as I know, there's no overlap. Even if there's an overlap, there's not an issue because their, the Cenexi is not developing this product. It's more a collaborative approach between the companies on that. Yeah, thanks. Just one more question. Would you be able to quantify, you know, what kind of investment you would make, need to make into this asset over the next, say, you said 15, 18 months to get the, unlock the commercial synergies? Would investments be required after that, you know, if synergies are not related to what you need to invest? Yeah. you know, we will not put a number right now at this point of time. Definitely we would be supporting the management in terms of the CapEx requirements. Most of the historical CapEx for the last two, three years has been focused on along with maintenance, the additional capacity and capability, especially on the other three sites other than Fontenay. They have plans to increase the capability and capacity on all these three sites. We will be there to support them in that CapEx plan as well. Just to add, Mr. Mitra, that their base level CapEx plan being factored into while evaluating the enterprise value. That we have already factored into. If anything incremental is required for the joint team or for to achieve some incremental business, we will definitely there to support them. All right. Yeah, thanks a lot. That's it from me. Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please proceed with your question. Good evening. Thank you for taking my question. Just the first one is on the valuations that we have paid. You know, it's difficult to look at the 2021 and 2022 half year to come to a conclusion of what the underlying EBITDA is. Any sense, one is 12.5%, other is 19%. Is the right EBITDA number 10x? Is it 6x? If you could help us understand. Also, 11 months have passed in 2022, right? A little difficult to work with six-month data. Just going back to Sumanta's point on, you know, don't use twice the first half number. Any sense you can give on what the right EBITDA or EBITDA multiple for at least calendar year 2022? Just one minute. Just one minute. Sure. If you go by, 21 EBITDA, it's around close to 10. If you go by the previous year. We have to look at, you know, the current situation in terms of energy costs in Europe and all that you have to see. When we have valuated this asset, we have considered the downsides, temporary downsides of this asset in terms of costs and the inflationary costs for the year 2. You know, and also the CapEx, like you said, all these were considered when we came out with this valuation. Got it, sir. When you make that assumption of the 20% IRR, you know, that multiple seems fair. That's the underlying question. Yeah, yeah. Yeah, it does. Yes. Just one clarity. I think their CY 2022 number is anyways not relevant from the perspective of our consolidation. Our zero year will start kicking when we start consolidation. The first half you have seen, the second half what Mr. Sardeshmukh was telling, this heightened inflation, energy and all, populated costs, we have already factored into. Basically the beginning of our FY24 is the beginning of their evaluation we have considered. Yes, Sumanta, I'm not trying to debate. In an inflationary environment, our margins have gone up. I don't know whether that's sustainable or not. I think I'm driving there. I think that could be just a timing issue where, you know, some of the projects, you know, in a CDMO business, some of the projects you do in a quarter and you not do in the other quarter because it's also when you hit a milestone, you'll get some revenue. It was a timing issue also. We can't like Ravi said, you can't just annualize whatever they have in the first half. Got it. Last question, just to be labor. When we look at European businesses in general, in other parts, they typically have lower margins, either generic or CDMO. Should we assume that this European business will also be lower margin, for an extended period of time, versus say your business or say US-based business? The idea is, you know, looking at the way this business is moving and, with synergies kicking in after two years. Initially probably the EBITDA percentage will be dilutive or the EBITDA is accretive, but EBITDA percentage will dilutive for a temporary period. Sure. From a longer perspective, you know, our efforts are to get to the levels, as a company, what we're looking at. We have plugged in all the synergies and growth levers and also how the Cenexi business is moving from an lower end AMP business to the other side. You know, hopefully we should get into the ballpark range what we normally look at from a margin perspective. Okay, sir. Thank you. Thank you, sir. Thank you. The next question is from the line of Ritesh Rathaur from Nippon. Please go ahead. Yeah. Hi, everyone. Thank you. Can you just highlight at the cost of repetition, what would be top three priorities to generate synergy in, on a near to medium term basis? I think one is some of the operational efficiencies at the Fontenay site where they have five manufacturing lines which could probably, you know, can generate more efficiencies there and generate more EBITDA margin. The other three sites are pretty good in terms of efficiencies. They already invested into a new line which is getting installed, so the investment's already been made. That will create a lot of efficiencies, I would suggest, and some automation is required in that line. That's one. The other is of course, the technology transfer products, what's happening in last 10-12 months. That needs to be accelerated. They're going at a pace, but probably the process has slowed down a bit. That's, there's a focus on that, how quickly can that be transferred. One is from service revenue perspective. Other is, how soon can we get commercialized in the other sites. Adding, the third one is of course adding, additional capacities and capabilities in these sites. The other, the Hérouville site and Belgium site, which have great teams in terms of quality as well as infrastructure. They need to add some capacity so that can add additional revenues. Of course, in parallel, the customer base what we have in other markets, we'll start talking to them, with the price what they're getting in Europe, can we start doing it or transferring it to our sites, you know. That's, that's another one. I would say these three things from one, from customer perspective, one is efficiency perspective. Other is accelerating the technology transfer of projects, what they've already signed up for. Okay. Okay. Maybe on the branded portfolio which Cenexi has, how pricing has behaved in the end market if you take top 20 products of Cenexi, even though it's a cost plus kind of a business, just to get a handle how that has panned out for their customers in last year or so? I think one good part of the European model, you know, is they also have the contracts are built into, you know, based on inflation. They can increase the price by the index. Many of the contracts are written like that, unlike I think, you know, some of the contracts which we sign in other markets. The end market price actually do not dictate too much. It's mostly to do with the transfer price between the customer and Cenexi team. The contracts are pretty clear how the price can be increased based on the annual increase of cost and inflation. Okay. My intention of asking the end market pricing was, are the products already matured and well competitive and customer won't feel any pinch of the price erosion? I got your point that transfer pricing will dictate. Yeah. It's already these are like branded, which has settled over many years. And these are like similar to like Indian branded generics. You know, they have their own place in the market. They only have margins in the market. The brands generate that additional margin compared to pure generics. I think that's where the play is. Because of the branded products they're operating in, I think these are at a little higher margin level compared to other products. Okay. Just to your point on the transfer pricing and ability to pass on inflation, those kind of reset happens annually with clients or it's a quarterly triggered? How frequent is that? If you can give some color, given the cost and the energy inflation which we have seen in Europe. Yeah. It's, you know, it depends on... We cannot generally comment on that. Definitely the objective and passing on is built into the contract. We'll not be able to comment on whether it's quarterly or monthly or annually. Okay. Thank you. Thank you. Thank you. Wish you good luck for the future. Thank you. The next question is from the line of Madhav Marda from Fidelity International. Please go ahead. Hi. Good evening. Thank you so much for your time. I just had one question. The INR 90 million gross block which you mentioned, what could be the peak revenues that we can generate? Basically, what could be the peak revenues from the existing site without incurring any additional CapEx? Yes. They're doing about $180 million-$185 million revenue. What's the peak? Yeah. Peak has been 190. How much? The assets are fully utilized is what you're saying? Right now they're running full throttle almost across all plants. No, no. Yeah. It all depends on the product mix also, right? Because when they're doing at 80, 180, 185, the product mix is more of ampules. The revenue will be lower, but you're utilizing more of ampule capacity. You have other capacities in other lines, once it shifts, then the revenues can be higher. It all depends on what products you make on other sites. There is capacity available, it's very difficult to tell at, you know, what is the peak because it all depends on the value of the product and what kind of products you transfer to those sites. Understood. Understood. Okay. Thank you so much. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah. Good evening. The first question is again around capacity utilization. Could you specifically delineate the capacity utilization in plants? You know, plant-wise, Fontenay and the other plants. It would help us understand, you know, what sort of Peak potential is available from the other sites. I think EUR 78 million comes from Fontenay is what you said, right? Correct. If you want specifically to particular line, particular site, I think we'll take it offline because we don't have it on hand. The other sites are underutilized compared to Fontenay, if you look at. To understand what is the peak revenue you can get from other sites, you know, even from Fontenay, if you replace some low-value high-value products, then suddenly the capacity is the same, but then the revenue might be higher. It's difficult to put a number on how much, you know, a site can generate. It all depends on what products actually can manufacture. Yeah. Just to add that there are also different, you know, like, for example, in brain you have to look at how much Lyo utilized, how much PFS utilized. You cannot generalize and tell that. No, I appreciate your point. Just, you know, in the same context, are the Lyo lines or, you know, the PFS lines sort of equally distributed across facilities or are they more available on sites other than Fontenay? No, they are available in Hérouville and the other two sites. They have only two sites they have this. Not in Fontenay. Okay. When you say that, you know, you could substitute low-value products being currently manufactured by high value, I mean, a very naive question here. Can you site transfer, you know, the ROW sort of sales of Cenexi into India, register the Indian site and get it manufactured from India and sell off in ROW and then, you know, the capacity that gets vacated there, you can use it for higher value products in European Union. Is that a possibility? There are a lot of, you know, opportunities out there, you know. We just need to take step by step. When I said high-value products replaced with low-value products, what I was saying is, earlier, only Fontenay site was there, mostly ampule production was there until three, four years ago. The other sites have come up with newer, you know, the higher value products. You know, whether it's syringes, it's normally high-value products. Lyo is a little higher value compared to an ampule. More and more business is coming to these plants, so the high-value products are coming to Cenexi. The margin profile is improving. That's what I meant to say when you're saying moving products. Moving around products from site to site, whether it's worthy to move from ampule product from Europe to India, all this is like, you know, in the future, we have to sit and see what are all the levers, what we have to optimize so that, you know, we'll get maximum benefits out of this acquisition. Yes. Then if, you know, we go through the call transcripts of Lonza or Recipharm or Siegfried, they've had a very good first half this year. All of them have reported very strong top-line growth. They have, in fact, you know, indicated on their commentary that there's now a trend of insourcing into Europe. While we do talk about, you know, China plus one benefiting India, it also seems to be a case of China plus one actually benefiting the European manufacturing entities and the American entities as well because people want local sourcing. That being a trend, do you see, you know, that leading to benefits for Cenexi also in the coming years? Absolutely. Actually, Europe, you know, always been a bit of like that because most of the manufacturing for European firms happens in Europe. It's more and more now, it's just not Europe. I think most of the countries are looking at insourcing within the country. Europe has actually, while it could be temporary setback in terms of the inflation and the cost, but if you've already seen a lot of European countries are as competitive as Indian manufacturers because they're way ahead in terms of automation of lines, manufacturing. If you look at number of people working for the same number of manufacturing plants in India, they're far lower. While the cost of labor and manpower is higher, still the number of people used are lower and a lot of more automation is happening in Europe. That way they become competitive. Yeah, you're absolutely right in terms of countries are looking at more in-house manufacturing. They want to keep the production locally. Some of the countries were already there from long time to keep this manufacturing within the country, and it's more and more prevalent now. Yeah, you're right in that sense. Finally, sir, are there any significant earn-outs or incentives for the management and, you know, any severance packages related to whatever automation that you plan, and also goodwill, if you could point out, related to the acquisition? We are actually entering this on a positive note, you know. We want to increase the manpower, we want to increase the business, we want to increase the manufacturing capacity capabilities rather than going into the negative mindset, you know, by automation, I want to reduce. I would say, you know, we'll automate it, but then we'll also add one more line. We'll increase the business so that, you know, we may not get to a place where, you know, we want to look at reduction of people. You know, the idea is to build business there. There's a lot of opportunity. I think we're the first one to have entered the CDMO space within Europe from India, so we have opportunity there. How we can join hands with Cenexi to offer more services to their customers, what we can do from India, as well as what our own customers can get out of the European Union. They also have a lot of presence in Europe, currently taking services from other companies. Can we join hands and can we offer to this? We know we are looking at a larger goal rather than looking at, okay, just automation or data space. No, that's not the point. The point is how to build business from here. Is land and utility available for future expansion or will you require to do greenfield for future expansion here? No, they have enough land, at the other three sites to expand, yes. Any idea one can get to be able to, you know, build equivalent capacity as they currently have, what could be the CapEx required given that it would be brownfield? I don't know. I mean, if you want to double the capacity, that's what you mean? Yeah. I'm simply saying, you know, double or maybe add 50%, whatever, just to get- Yeah, probably EUR 70 million, EUR 70 million-EUR 80 million, could be invested if you want to double, yeah. Mr. Tharage, may we request that you return to the question queue for follow-up questions. We'll take the next question from the line of Mitesh Shah from Nirmal Bang. Please go ahead. Thanks for taking my question, and good evening to all of you. I just have a couple of questions. This energy crisis are impacting our margins or our production as well? It's not impacting the production because I think they have enough supply. I think it's just a cost. Also I think some is subsidized, some is not subsidized. They're still negotiating. Like I said, they do have some contracts where they can pass on certain costs. When we have done a valuation exercise for this asset, we did consider all these incremental costs for the temporary reason for the first two years. Yeah. Thanks. My second question is regarding their contract with the customers. It would be how long? It would be a long-term contract or it is shorter term and it will be renewed continuously? It would be any having order book position for the company? Yeah, it varies from customer to customer, so we can't really comment on how long it is. Like I said, good thing is, I think 70% of the customers are sole supplier. That itself gives us confidence that, you know, the customers will stick. Most of them are there for more than five years. I don't see them moving out. Yeah, what's the other question? Just one last question. That acute you have said are coming down, what would be the% or last three years that would be came down with, three years back and today? That... sorry, couldn't get. What is coming down? Acute portfolio. You said that. Acute portfolio. I don't think. There's a misunderstanding. We didn't say about acute portfolio, no. No issues. I said ampule. Ampule, not acute. Ampule. Okay. Got it. Sure. Thank you. Just one point, Vasant. Before we close, we also like to give a brief summary about the business updates specifically on our existing business. We'd like to just hold on to it. You know, Sorry. If you'd like to just give a broad happening on the business side of it, existing business side of it. From current business perspective, I think, you know, we talked a lot about the shortages over the last couple of quarters. I think it's kind of settling down already. I won't say 100%, but it's settling down, so it's coming back to normal. The competition is intense, you know. We all know about it. We are launching several products. Approvals are intact. The filings are on track. From U.S. launches and U.S. filing perspective, we are on track for those. ROW business, some of the markets are coming back again. It's just a slow progress, but I think we're getting there. From margin perspective, there's a pressure on, you know, the costs, we all know. It should be there for like a quarter or so where... Again, the logistic costs are coming down, so probably, hopefully it should settle down by next quarter or so. From business perspective, I would say it's stable business. The competition, you might have heard from the news, a lot of companies actually are exiting. We see a lot of companies, the, you know, they're getting out of certain products. We anticipated these changes to happen. I think I did mention a couple of quarters ago. We see some irrational pricing at the marketplace. That's kind of going away, little by little. Some assets are going up for sale. I think it's moving towards a direction where I think the players will come down, hopefully because of the competition in place in the market. We are just watching and seeing, you know, how the portfolio behaves. We are intact in most of the molecules. Of course, there are a lot of shortages again we're seeing in the market because the companies are exiting. Are we able to react to the market demand like before? We are not because of still the lead times for the several components are longer. If you look at three, four years back, we, you know, used to react very quickly. We are trying to increase our inventories to react to these shortages. It's a dynamic situation which should settle in, I think three to four months, you know, if we have to generalize the whole, the business. Thank you. Thank you. Thank you very much. On behalf of Gland Pharma Limited Management, I would like to thank each one of you for taking time out and joining the call. We now conclude the call. You may click on Leave button to exit the meeting. Thank you. Thank you. Thank you. Thank you. Thank you, sir.