Ladies and gentlemen, good day and welcome to Gland Pharma Q2 FY22 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation is complete. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumanta Bajpayee from Gland Pharma. Thank you, and over to you, sir. Thank you, Margaret. Good evening, everyone, and warm welcome to Gland Pharma's earnings conference call for Q2 of financial year 2021-2022. I have with me Mr. Srinivas Sadu, Managing Director and CEO, Mr. Ravi Shekhar Mitra, our CFO, to discuss the business performance and to answer queries during the call. We will begin the call with opening remarks from management, followed by Q&A session. Before we proceed with the call, please note some of the statements made in today's discussion may be forward-looking, and this must be viewed in conjunction with the risk and uncertainties involved in our business. The safe harbor language contained in our press release also pertains to this conference call. This call is being recorded, and the playback shall be made available on our website shortly after the call. The transcript of this call will be submitted to the stock exchanges and made available on our website as well. I will now hand over call to Mr. Sadu for his opening remarks. Thank you, and over to you, Mr. Sadu. Thank you, Sumanta. Good evening, everyone. Welcome to our earnings call for Q2 of fiscal 2022. Wishing you and your family good health. After nearly 18 months, life finally seems to be getting back to normalcy. We had stable manpower availability during the quarter. Some of our equipment vendors were able to travel into the country, and that helped us complete installation of new lines. Our capacity expansion is coming along in a timely manner to support our future growth. The surge in consumer demand across industries was unanticipated and resulted in shortages of power in certain sections. While we saw power shortage resulting in power cuts in China, in India, the supply of power remained relatively stable, but industry saw a rise in prices of power and transportation. We may face delay in supply of certain raw materials from China if there remains a prolonged shortage of power. However, we maintain sufficient level of inventory of raw materials. On the R&D front as well, we made good progress as we completed planned submission batches for complex injectables to be filed in this financial year. We are on track to make four complex injectable filings in this financial year. The other development projects are also running in line with the plan. We delivered a strong performance this quarter, Q2 FY22, with a revenue of INR 10,805 million. That is a year-on-year revenue growth of 30% for the quarter Q2 FY22, resulting in also a growth of 30% for the six-month period, our first half of FY22 over H1 FY21. With a PAT of INR 3,021 million, we saw year-on-year PAT growth of 38% for the quarter Q2 FY22, resulting in also a growth of 23% for the six-month period of H1 FY22 over H1 FY21. We have generated INR 2,355 million of cash flow from operations for the six months FY22, despite external stress on supply chain. We continue to focus on revenue diversification across geographies, which is helping us further improve our manufacturing efficiencies because of benefits from scale as well as de-risking the business. We're ensuring that we absorb any decline in gross margins by benefits from scale on the operations front, thereby maintaining healthy profitability. We have entered into technology transfer agreement for Sputnik Light as well and also completed three submission batches. For Sputnik V, we have completed submission batches for the first component, AD26, and technical batches for the second component, AD5, with improved yields. As soon as manufacturing licenses is received and export restrictions are removed, we will initiate manufacturing. We opened our new R&D center and expanded our R&D team having capability in development of complex APIs. Our R&D expenditure for Q2 FY22 was INR 578 million, which is nearly 5.3% of our revenue from operations. Upon excluding capital R&D expenditure, the R&D expenditure stands at 3.3% of our revenue for the quarter, which is in line with our historical trend. As on thirtieth September 2021, we along with our partners have 291 NDA filings in the U.S. and 1,580 product registrations globally. Let me take you through the business highlights across various geographies. Our rest-of-the-world markets business continued to show strong demand for our core portfolio. This segment accounted for 21% of our Q2 FY22 revenue as against 18% of our Q2 FY21 revenue. We have seen 15% growth in revenues for the quarter. This has been driven by new product registrations and increased penetration of existing portfolio, especially from markets such as Brazil, Saudi Arabia, and Thailand. Our existing portfolio is seeing strong demand from new partnerships entered into during the year. Our key markets, namely U.S., Canada, Europe, and Australia, accounted for 62% of our revenue during Q2 FY22 as against 64% during Q2 FY21. We have seen 25% year-on-year growth in revenues for the quarter, which is a function of both healthy rate of new launches and volume growth in core portfolioOn including India sales for our core markets, the year-on-year growth is at 27%. With declining COVID-19 hospitalizations, we observed a shift in product mix. Our wide therapeutic portfolio helped us to sustain growth despite changing market demand. Our rich R&D pipeline is helping us maintain strong momentum of new product launches. We launched 12 molecules in the last quarter. We filed 5 ANDAs and received 5 ANDA approvals during the quarter. We also filed three DMFs during the same period. India market accounts for 17% of our Q2 attach [momento revenue], out of which 9% accounts for domestic market sales and 8% accounts for Indian sales for export markets. We have seen 19% year-on-year growth in revenues for the quarter on account of volume growth of existing products like enoxaparin sodium and heparin sodium injection. With COVID hospitalizations coming down, demand for our regular critical care products is on the rise. This portfolio has not gone back to the pre-COVID levels, but it's looking positive. Our near-term focus remains on establishing a strong portfolio of complex injectables, for which, while we are having an internal program, we're also looking at acquisition opportunities to help expedite the development process. Installation of new line catering to suspensions and hormonal products has been completed. Biosimilar API is the next long-term growth driver we are working towards. While our experience with vaccine collaboration has helped us gain the knowhow and accelerated creating facility and technical team, we are also looking at opportunities to collaborate on the biosimilar front to build a pathway to cement our position in the future. On the quality and regulatory front, all our plants continue to remain approved by USFDA. Our customers are conducting audits regularly, and our team continues to remain prepared for any audit. We try to continue delivering strong results for all our stakeholders. I once again wish everyone good health. I now hand over the call to our CFO, Mr. Ravi Mitra, who will share some more insights about our financial performance for the quarter. Thank you very much. Thank you, Mr. Srinivas Sadu. Good evening, ladies and gentlemen. Thank you very much for attending our Q2 earnings call. Our earnings presentation has been submitted to the stock exchanges and is also available on our website. Let me begin with sharing the financial performance of Q2 and first half of Financial Year 2021/2022. Revenues from operations for the Q2 FY22 stood at INR 10,805 million, a year-on-year increase of 30%. We achieved robust growth across all markets, with our core market, U.S., Canada, Europe, and Australia registering 25% year-on-year growth, and ROW market continued to demonstrate a healthy 59% growth. The growth in revenue was driven by a mix of new products and growth in existing products. Revenue from operations for the first six months of FY 2022 stood at INR 22,334 million, a year-on-year increase of 30%. Other income for the Q2 was INR 512 million, which includes interest on fixed deposit of INR 352 million and foreign exchange gains on operations of INR 158 million. For the H1 FY22, the other income was INR 1,130 million, of which interest on fixed deposit was INR 691 million and foreign exchange gains on operations of INR 435 million. We have reported an EBITDA of INR 4,278 million in Q2 FY22 compared to INR 3,181 million, which is an increase of 35% compared to same period last financial year. The EBITDA margin for Q2 FY22 stood at 38% as compared to 37% for the same period of previous financial year. We have managed to improve the EBITDA margin in spite of increase in operating expenses such as power and logistics, primarily due to higher operating leverage achieved on increased capacity utilization. The EBITDA for the six months ended September 2021 was INR 9,259 million compared to INR 7,628 million for the same period last year, a growth of 21%. We have reported EBITDA margin for H1 FY 2022 at 39%. Our net profit for Q2 was INR 3,021 million, a growth of 38% compared to Q2 FY 2021. During the quarter, we have recorded PAT margin of 27%, which is an improvement of 100 bps compared to same quarter previous financial year. During the six-month period of the current financial year, our PAT was INR 6,527 million, which is an increase of 23% as compared to last year. To further expand R&D capabilities, we have commissioned our new R&D facility during this quarter, which is located at Pashamylaram. The total R&D expenses for second quarter were INR 578 million, including the cost of this new R&D center of INR 211 million and stands at 5.3% of revenue. Excluding this cost of new R&D center, our R&D expense remains at 3.3%, which is in line with our plan. The total R&D expense for the six-month period were INR 1,015 million compared to INR 482 million during the same period of the previous financial year. Our effective tax rate remains at about 25% in second quarter and for the first half of the current fiscal year. Cash flow from operations during six-month period was INR 2,355 million. Cash flow from operations has come down during this period due to higher receivables and inventory levels. Working capital increased and stood at INR 20,334 million as on September 30, 2021, as compared to INR 16,054 million as on March 31st 2021, driven by growth in our business. Average cash conversion cycle stood at 198 days for the 6 months ending September 2021, as compared to 180 days of same period last financial year. We have maintained similar range for receivable and payable days compared to previous year, but due to increased inventory, our overall cash conversion cycle has increased. All our planned CapEx plans are progressing well. Total CapEx incurred during 6 months of 2021 was INR 3,286 million, used for increasing capacity at our Pashamylaram and Vizag API facility, our new R&D center at Pashamylaram, our biosimilar and vaccine manufacturing facilities in Hyderabad, and for routine maintenance CapEx. Our ROCE on ex-cash basis was at 35% on an annualized basis for the 6-month period of this fiscal year. Our fixed assets turnover stood at 3.4 × for H1 FY 2022, increased from 3.0 × for the same period last full year due to increased capacity utilization. As on September 2021, we had total INR 29,822 million of cash, which we intend to utilize for the CapEx plan and to fund our inorganic growth strategies. With this, I would request the moderator to open the lines for questions. Thank you. The first question is from the line of Sonal from Emkay Global. Please go ahead. Good evening. Thank you for the opportunity. My first question is on the profit share component. We are aware that it was somewhere around eight percent in FY 2021. Can you provide some more details in terms of how historically that segment has moved for us for the last three to four years? Our profit share component. Our profit share component was around eight percent of revenue in FY 2021, but historically, let's say in FY 2019, FY 2020, how that has moved. What was the proportion? Members of the management, we cannot hear you. Yeah, it's within the range of eight-10 percent, I would say. Okay. It all depends on how many products gets launched in that particular year, normally. How many new products which are launched in a certain space. It normally falls between eight-10 percent. Sure. Is it fair to assume that majority of that gets generated from U.S. and North America? That's correct. Sure. The last one on that. As you alluded that 8%-10%, it kind of fluctuates with the new product launches. Is it again fair to assume that, generally, a good portion of that 8%-10% comes from the new product launches? Even for the old products also, the profit share component is always there. For the older products, the profit share might go down over the years because once the product, there's more competition at the end of time. It kind of gets covered by the new launches what we do, where the profit share component is normally high. Sure. Thank you. Thank you. The next question is from the line of Runjhun Jain from Iroha Investment Management. Please go ahead. Good evening. Thank you for the opportunity, congratulations to the management for a great set of numbers. I had two questions. The first one was, I wanted to understand, the ROW market has been growing fantastically for the company. Just wanted to hear from you on what is your steady state view in terms of geographical spread. Earlier we had started with about 65%-70% of U.S., now we are about 54%. Likewise, for ROW, we were somewhere in the range of 15%-20%. Now we are over 30%. How do you see that in the next two, three years going forward? Because of the lower base we are seeing, I think the growth rates on a higher percentage. Overall base is still our core markets is contributing about 61%, and the ROW is contributing about 21%, which is higher than 18% if you only compare to the last quarter of the last year. Overall, I think it will stabilize over a certain period of time once the base hits normalcy. The reason why it is growing fast is, of course, historically, we didn't have enough capacities to cater to other markets while we had registrations across the globe. We were focusing more on our capacities to the U.S. market and the regulated markets. Now, with the new facilities adding up and new lines coming online, we are also expanding our portfolio to other markets. While we are leveraging the old registrations, the products that we are registering in U.S., the newer ones, have great opportunities in other markets where the margin profile is little better than the older products. That's one of the reasons why also it's helping the products to grow in the other markets. Got it. It's fair to assume that this 59% kind of ROW growth will not continue over a period of time. Any particular range where this would end up stabilizing at? Still, totally as a company, we're looking at ROW to stabilize around 40%. We are still at 21%, right? Still a long way to go. At what rate depends on how many products we're able to move from the U.S., what are getting registered there. I think our own internally, we are looking at next four, five years to get to the level where it should be 35%-40%. The growth might vary from quarter to quarter, depending on the approvals of certain products in those markets. Got it. That's clear. My second question was on the movement in working capital. I saw that there was some increase in trade receivable. Is that just a period end adjustment, if you could give us any color, because last year, I think the number was around ₹46 crores. Now it's around ₹375 crores. Yeah, it's more to do with the timings of the sales. I would say, if you see the preliminary part of this quarter, the logistics were a little difficult. Most sales happened in the second half of the quarter. One was the availability of the containers and transport back then. Also, it was more expensive, so we were waiting for that to at least settle down from the pricing perspective so that it not impact the margins. Most of the receivables are not due yet, but it will stabilize, I think, next quarter because of the delay. I think the late sales that happened, we are seeing this. Got it. Thank you, sir, and all the very best. Thank you. Thank you. The next question is on the line of Tarang Agrawal from Old Bridge Capital. Please go ahead. Hello, sir. Good evening. Just wanted to check, sir. Is there an element of seasonality in your core markets business? Not much, I would say. Of course, it depends on the portfolio. If you have a concentrated and a certain set of portfolio, you will see the seasonality. We have breadth of portfolio. While some of the products sell more during October to December, this time frame may be more effective. Otherwise, it's spread across the year. I was just wondering, on a sequential basis, the sales in the core markets have been softer. I noticed this in the last Q1 to Q2 last year as well. If you see the larger products in anti-infective, right? Whether it's miconazole or daptomycin, these are the larger products compared to the other products. These add larger revenue to the revenue percentage. That's why you see this. Few products are adding to that number increase. Otherwise, overall it's okay. I think some of the products which are contributing more sales during October to December and January to March, that time frame. That's why you see that bump a little bit. Got it. Thank you, sir. Thank you. Thank you. The next question is on the line of Achal Bhade from Investec India. Please go ahead. Hi, sir. Thank you for the opportunity. First question was on the complex injectable- Achal, I would request you to please speak on the handset more. Your audio is not clear. Yeah. Is this better? There's a lot of background noise, sir, but if you can mute yourself while the management gives the answer. Thank you. Yeah. My question was on the complex injectable portfolio. As it is an area of focus for us, would want to understand more on what sort of complexity are we talking of here? Like, is going to be the target? Is it going to be the complex API or the formulation or the complexity around the device? If you can give some color on this? If you look at the total basket, the complexity varies from product to product. Some products, the APIs are difficult, some are formulations. It's a combination. Some are dosage form itself. As of now, we are creating capacity of I think 50K capacity is being created at the substance side, which we have actually created for the vaccine, then it's getting expanded to the CDMO for the biologics space. That we'll start with. While we are discussing with companies, if the size of the plant is enough, if we need, we can actually expand more. That's where we're going to start with. From deal perspective, we are talking to companies within the chosen framework, trying to start up with them to initially run some of their substances from the Indian side. Then in parallel, work with other players. More and more, we are seeing the interest coming from a lot of generic as well as innovative companies, trying to create the portfolio and extending the biologics in the portfolio and trying to get into companies like us for the clinical batches, for the trial batches, and that will be leading to the commercial batches. Got it. Is there a kiloliter or a liter number that you can share in terms of capacities? The capacity what we're creating is about 60K, that's what we said. Is that the question? Yeah. No, that's helpful. I was wondering if there are plans to expand it, but I'm assuming that's where you'll start and then see. Yeah. Expand later. Thank you so much. All the best. Thank you. Thank you. The next question is on the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Sir, on the core market side, for the past six months, you have launched almost 24 molecules. On the quarter-on-quarter basis, we do see some reduction in the sales. If you could throw some light there. It all depends on the size of the molecules what we have launched. If you see last year, the big product got launched. You're comparing with a product like micafungin and daptomycin were the big products, which were one of the leading products for us. We got launched that last year and the previous year. You're comparing with those where the products what we launched now are the smaller version. That's one. Second, we can't really go with this FY 2021 and now because it's complete different way the portfolio has worked. Once the complete shift happens, still 100%. The post-COVID, I don't think has happened 100%, the shifting to therapeutic portfolio. Once that happens, then you'll see a difference in terms of the revenue breakup between the molecules. You're still seeing some traction on account of COVID, which probably may, assuming that now that the cases reduce, so it would die down in the coming quarter? Yeah, we're already seeing that as it's moving. I know next quarter, we are seeing actually most of the products which we were selling pre-COVID are coming back. The COVID-related drugs, which we sold in the first quarter, especially in the rest of the world market, it's not coming out. In the U.S., it's gone away. I would say we are at 70% level in terms of most of the portfolio. Currently, what we're seeing this coming quarter as compared to the last few quarters. Got it. Just secondly on this, any update on U.S. FDA inspection, given that we do have good number of products in the pipeline which are under shortage, so that kind of should have triggered U.S. FDA inspection. We have not heard anything from them yet. Our inspection was in September of 2019. What we are seeing, they are visiting the sites. What we also hear is they are visiting sites where they have earlier issues or under one letter, or visiting sites where they have a 483. Since our sites are already approved and most of the lines are already approved, maybe we have not heard from them. It's part of life, right? I mean, being a FDA approved plant. They gave us the batch, and whenever we hear, we have to face it. Got it. Just lastly, if you could just explain this R&D capitalization for the quarter? Just to clarify, Tushar, that we don't capitalize any revenue expense. In this quarter, we have opened a new R&D center. Post-commissioning with the building and equipment, everything which was sitting in CWIP has now moved into fixed asset. That is the amount, INR 211 million. Other than that, our R&D expense on the revenue is similar to what our plan in earlier quarter, which is around three and a half-four percent. Got it. Which effectively means this is more of also kind of a one-time impact. Yeah, this is one time. Once now the equipment and R&D building, the new center has been capitalized, so it will not be again coming. Got it. Thank you. That's it from me. Thank you. The next question is on the line of Fiona Chan from Nomura Asset Management. Please go ahead. Hello, good evening. Thank you for the opportunity. My first question is, I think last quarter you mentioned, many of your U.S. customers were facing high inventory levels due to stockpiling and lower elective procedures. I wanted to check, how are your customers' inventory levels now, and have there been changes in customer ordering patterns since COVID? Thank you. Yes, we are seeing that. In fact, some of the products are getting the benefits of the situation where we did hear from a GPO certain products, and also from some customers coming up with some emergency orders, because whatever stockpiling happened in the U.S., one either sold off or got into that expiry mode. There's a shift, and there is a change in the way the ordering is happening now compared to last quarter. I see. Would that translate into lower margins for you due to emergency shipping and higher logistics costs? No, not really, because the logistic costs are only. You could see last quarter also, the costs are on the higher side on the logistics side. It's already inbuilt in the product supply. I see. Earlier you mentioned there were some logistics issues and delays. Are these related to shipping to the U.S., or are they also related to sourcing from China? Mostly shipping out, especially the initial part of this quarter. Now it's kind of stabilized. I think I would say July, August timeframe, there was availability of containers was a problem. It got resolved, I think, later part of August. I see. To follow up earlier on the Sputnik vaccine. Am I correct in understanding that the production of Sputnik Light also satisfies your requirements with the RDIF on the take-or-pay contract? You could produce either one, and you would satisfy the terms? Yeah. The quantity what we have agreed with them includes this as well. Okay. Do you have any updates on opportunities in China? We have filed one more product this quarter. Seven products have been filed now. Hopefully, we're estimating approvals for one or two products either this quarter or the Q1 of next year. Okay. Wonderful. Thank you so much. Thank you. Thank you. The next question is on the line of Anil Chaurasia from HDFC Securities. Please go ahead. Thank you. Thank you for taking my question. Sir, I wanted to know some clarity on the margins going ahead. What would be the trajectory and what would be the key drivers that will help margins to either move up or if it is expected to remain at similar levels going ahead? The second question I have, is the competitive intensity in the injectables space is likely to go up considering lot of Indian players are entering in this market. How do we plan to protect our existing business from such competition? Are we looking to do more long-term tie-ups with hospitals, et cetera, or the backward integration is the key? Thanks. I think, one is on the competition side. We always see that as an advantage for us because we can actually license our products to the new companies as well. Any company who are entering, they not have a larger portfolio like what we have. Being a B2B player, every new player coming there actually it creates one more opportunity for us to license products to them. Unlike a front-end player, our being our model is little different. It kind of helps us in spreading our portfolio across more companies. In terms of margins, we still estimate to be around 37%-38% of EBITDA. I think we're able to manage that. In spite of the logistic cost increase and the power and to absorb this cost opportunity that we had selling more units. If you look at our business model itself, it's spread across different fronts. Whether it is licensing of doing a tech transfer from other companies to us, or whether it being a contract manufacturing. Aggressively every quarter. While there could be a pressure on margin, which as a B2B company, we absorb little pressure on that because it is mostly taken by our front-end partner. Whatever number it hits us, we are able to compensate that by doing more volumes, because we supply products to different partners across the globe. Sure. Thank you so much for taking my question. Thank you. Thank you. The next question is from the line of Sonal Gupta from L&T Mutual Fund. Please go ahead. Hi, can you hear me? Sorry. Yes, sir. We can hear you. Okay. Thank you. Hello. Thanks for taking my question, and good evening, everyone. Just wanted to check one on the India business. Is this kind of a runway sustainable now? Or do you see further revenue coming up contribution in this quarter? I'm sorry. You're not audible at all. Could you repeat that maybe louder? Hello We can hear you, but the clarity is not there. Is this better? Yes, this is better. is better. Thank you. All right. Yeah. Just on India, I just wanted to understand that, is this quarter, I mean the quarterly run rate that you've done this quarter, does that still have some contribution from COVID, or do we see this as a sort of a sustainable run rate? No. Actually, there's no COVID sale at all in Indian business. If you see our Indian business, right, it's a combination of our own sale to the plantain business in India, and it also has a component what goes to the U.S. through Indian partners. If you specifically look at the Indian business, what we're selling in Indian market, it's kind of settling down to the previous growth rates. Got it. Ideally, you're saying that the 8%, I think, should be actually counted as a part of U.S. sales, right? That's correct. Okay. Just again, on ROW, you did mention last quarter also there is some contribution from COVID related products as well, but we are seeing that the sales are sustaining at that level. Should we assume that COVID should not really negatively impact this going forward? Even other markets, like I said, during COVID, we started supplying some COVID-related products. The ministries have actually opened our product portfolio. They registered other products as well. Actually we started supplying other products which are just totally normal course of time. In that way, it also helped us to pushing some of our products into the market where we never sold any product. Got it. Just on, like last quarter you mentioned about enoxaparin contracts in the U.S. Have those started and have those ramped up in this quarter, or do you see further ramping? It between from October to December. The major ramp up happening from the next quarter. This quarter it's not been that meaningful? I'm just trying to understand. No, not that meaningful. Okay. Just lastly, your comment on gross margin. Like you mentioned, you're offsetting it with operating leverage. Just trying to understand, this gross margin pressure, the raw material cost pressure is more a function of product mix, I mean, across markets? Or is it a function of increased raw material cost? I'm just trying to understand what is the reason for gross margin, I mean, the raw material cost going up further. Our gross margin concept is little different than other companies, right? If you see our gross margin, it's a combination of our own product sales, it's a combination of contract manufacturing, and a combination of the tech transfer. If you see, my gross margin on a quarterly basis, it changes depending on the mix I sell. If I do more of contract manufacturing business, it's 100% gross margin because we don't build the materials. If I do more of that, then suddenly my gross margin looks very high. My tech transfer again, some are profitable and some are not profitable. It all depends on the mix of that and also mix of markets I sell the products. It's not a like two like situation like other companies where they're selling their own product directly in the market where the gross margin is excluding the materials. For us, because of our business model, it's not a right indicator of the price pressure and the cost involved in it. There is a increase in logistic cost. It contributes, now it's all over EBITDA level, probably around 1%. Net margin is better off if the logistic cost was not as high as it was in the last quarter. There's an impact of 1% at EBITDA level because of the logistic cost. For the input materials, we didn't see much difference. If you look at some of our purchasers, especially from the API front, 30% of our materials are imported, 30%-40%, and there's no big difference on the cost of those materials. From material perspective, it didn't have much impact. Its only impact was from logistics and power and the diesel. I think that's what has contributed impact, and that's about 0.8% to 1% at EBITDA level. Got it. Great, sir. Thank you so much for that detailed explanation. Thanks a lot. Thank you. The next question is on the line of Sumit Sathuria from Motilal Oswal. Please go ahead. Yeah. Hi, good evening. My first question, while you alluded to it at the beginning, your operating cash flow conversion is about 35% for the first half. The historical average has been about 70%. Would we reach to 70% by the end of the year as well, or is this year going to be a little different? Yeah. Couple of factors for that. One is that, what we were discussing, that there were logistic challenges in the first half of this quarter, which kind of pushed down the sale to later months of this quarter. That's why this year it has got increased. There's no overview or anything. It's just the timing of it. The other is the inventory, where we have been restocking, considering the planned launches we have and as well as the new enoxaparin contract. Once that starts inventory shift to the customers, that is expected to go down. By the end of the year, we expect that to come back to a normal operating level of working capital. Got it. Sushmit, if you see now, in a fast-growing company where you're growing at 30%, you also need to catch up with inventory, right? When you are calculating the inventory, which is based on the history, but you are gearing up for the next growth for the next quarter. Your inventory is always 30% higher than the previous. That's a delta, and that's a problem with the growing companies, right? Absolutely. The second question is, what would be the risk of the Sputnik contract not getting fulfilled? I mean, what are the risks that one should be mindful of? See, at least, even if you supply 20 million vials or even 15 million vials, we get all the investments what we made on the infrastructure and the materials what we bought. That way, I won't see a big risk. That's one. Second, the whole idea of getting into this is working towards the biosimilar CDMO space. The plant is there, and we are creating the infrastructure, keeping in mind the long-term growth in this space. This is more getting into the space, and we took this opportunity so that we fasten our entry into that. What we wanted to do two years down the line, we did it now because we had an opportunity to encash and do the vaccine opportunity. I don't see that as a loss for us. It's an investment we made. One, looking towards long-term growth. Second, learnings what we get from doing the technology transfer happening for the vaccine project, and creating a team who has this capability and the experience we are getting from it. Secondly, from investment point of view, specifically for this project, is very limited, I would say. I know we have the confidence that, whenever it starts, even if we do half of what we have signed up for, still we will be very well off. Just to Sorry, on this point, there is no take or pay penalty on RDIF, right? I mean. No, there's no penalty on it. There's no penalty on that. Okay. Thank you so much. No. All the best. Thank you. Thank you. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah. Am I audible? Yes. Yes. Better. Yeah. Good evening. Sir, the first question is around your U.S. business. You have 244 approved ANDAs. Could you first clarify as to whether all of these are in the market? Have you commercialized all of these, or to what proportion have these been commercialized? If you actually break it down into molecules, that's easier to study. Out of 244 ANDAs, I think the total molecules, if you see, they're about 153. Right? We have launched about 106. There are tentatively approved products, about 11. What we have not launched was approved, which will happen in next quarter, is around 14 products. There are also some tech transfer projects. I would say, out of this, what are launched, out of 153 molecules, 106. They are tentatively approved, about 11. 117 have gone there, and then there are few more products we have to launch in next few quarters. Okay. The 47 pending approvals would in molecule terms also be equivalent, 47 or a different figure? From the molecule level, it around 22 molecules. Right. For a layman like me, if I do a very simplistic sort of an exercise, 47 pending on a base of 244, although you have already clarified that there are some ANDAs in pending numbers. If one were to assume that the revenue potential is somewhat better given that there might be complex filings there, it would still look like the pending ANDA is around 20% of the base of approved ANDAs. It might be wrong on my part to look at it in such a simplistic format. Could you give some idea as to what sort of growth potential these 47 pending ANDAs could give you for the next three years, maybe? I presume their approval cycle is three years. The filed and approved products, if you see, the market size is about $4 billion. What we have approved already is around $11 billion. That should give you an idea. $11 billion is approved products, and around $4 billion is filed and waiting for approved products. Okay. Would it also be reasonable to assume that these products have, from a competitive standpoint, because they are relatively more complex, market formation would be more in your favor, and revenue potential for ANDA could be better? Yeah. If you see around INR 11 billion what we have approved, out of which about INR 3.5 billion is still tentatively approved and not even launched. It's waiting for either the product to settle and have a particular product launch date or waiting for the patent expiry. Okay. I can't really comment on how difficult are these, how many players will be there. Like someone was saying, so many players are coming into this space, so I can't really tell who has filed what. Again, these products, we have a breadth of portfolio and we're getting into the launch. Hopefully, we should continue the growth and margins what we're showing now. The right way to look at it is that actually you've commercialized $7.5 billion worth of total addressable market, and you have another $7.5, that is four plus three and a half, left to commercialize, right? Am I correct in that assessment? This could happen over what time frame? Probably three, four years. Three years probably. Okay. three-four years. Right. All right. If you see the approval time currently it's faster. If you see a year ago, if you look at our pending list, it was very high, and we're getting many approvals in nine months to one year as we speak. We got one yesterday. It could be faster also. Now we are doing a catch up to file those products. That's where our efforts are gone. When you're saying we have created this additional R&D center and creating additional teams, is to even catch up with the overall speed with which they are clearing now. Historically, we've been looking at 20-24 filings. Now we're seeing how to increase this 40%-50%, so that we get more approvals in a quicker time. Okay. Secondly, on the ROW business, is the receivables and inventory profile similar to your regulated or U.S. market business? Is it very different? If it is, could you give some idea of to what extent? The receivable time is little longer than the U.S. I think it's around 120 days. It's around 120, yeah. 120 days. 60 to 80 of there. Compared to 60%-80% of the regulated market. In terms of the payment receipts and all that, the companies whom we are entering the contracts are mostly buy and sell of our products in some countries, resilient sales in some countries. We're looking at extending those relationships to other markets so that, one is relationship with those companies will grow. Other is the business is more standard than one-off thing. Secondly, because we're getting into contracts with the companies who are leaders in those markets, because not every product can be sold everywhere. We're not trying to sell all the generic products. We're looking at the margin. Some are like, most of the countries have retail market and there the prescription also helps. We are entering contracts with those companies who have solid financial background. The fixed asset turnover, which you indicated is now at 3.6 for you. What could be the peak that you could see on your current gross block for that? This will further increase when we start commissioning the existing additional lines which we are putting up in Rajendranagar. There is hormone substance line which is coming up, and there are lyos also which is currently being installed. There is also a PFS line which is coming up. All put together, I think in next year it should go up further as we utilize further installed capacity. Any ballpark number to understand your utilization levels currently? Utilization, I know it all depends on which line and which product we are doing, right. If you look at our pre-filled syringes, it's only around 50%-60% capacity utilization. If you look at our, some of our lines are almost running at 80%-90%, but we also have just added new liquid lines. Overall, I would say around 60%-65% capacity utilization. We still have enough capacity to grow the next couple of years. Right. If one were to look out 5 years from now, you've given a fair bit of idea of how the U.S. market will evolve and how the ROW will evolve. If you could give some idea of your aspirations around biologics in China, both China from your filings and also possibilities from the Fosun Pharma, for us to get some understanding of the prospective size of that opportunity in a 5-year time frame? You mean the China market? Yeah. China plus biosimilars, both. Biosimilar, see, we are not developing products. Unlike companies who are working on development of products and marketing, we are only doing on the CDMO side. It's too early to comment on how large that business will be. But there's almost like, the market size around $30 billion-$40 billion. The biosimilar CDMO. Okay. Sorry. The $12 billion-$13 billion is a CDMO biosimilar business opportunity. That's where we are entering in. We are not into developing products and licensing those products yet. We want to work with companies who are looking at leveraging our substance and fill-finished capabilities. From China angle, I think we get continuously down with the portfolio, and the target is in four-five years, we want to have at least 10% of our revenue coming from that market. Great. In China, the business economics would be quite comparable to what you currently have in terms of margins? No. Well, in selection of products is that way. We are looking at company products which are completely innovative kind of products in those markets, not the normal products. The selection is happening like that, and the margin profile is far better than any other market. Okay. The biosimilars capacity you indicated is around 60 kiloliters. I understand everything is down to product selection and all your contracts and CDMO, but could you give us some sort of a very baseline understanding of what that translates into, from a possible revenue potential? I'm not asking for a fixed number, but maybe a band within which we could understand, at optimal utilization, what sort of potential that 60-kiloliter capacity has. It's very difficult to tell. It all depends on which customer, which product, and how much utilization they take. Any number I say is not real, so why say a number? If I flip the question and say, if you could give me the idea of what's the investment that's gone in and is a fixed asset turn on that investment going to be very different from what you have, or materially different, or comparable to what you have? Give me a second. I can answer in this way, that the investment which we are making in this biosimilar CDMO. With ourselves, as well as with the strategic partner, but that could ensure that we look at a IRR of at least 20%, and that's how we take any investment plan. What's the investment size here? I'll let you know all these answers once we go forward on this journey. Thank you. I would request Mr. Khareja to rejoin the queue for follow-up questions. We would also request participants to limit your questions to two at a time. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yes, thanks for taking my question. Sir, you mentioned about ROW market going to around 40% over a period of time. Can you give some color as to what would drive it? How much would there be from new markets like China, and how much would be from your existing markets? The second question is, if you can also share the contribution from new launches in the first half of this fiscal year. Yes. China, we're looking at 10% of the revenue contribution in coming years, the rest 30% from the other markets. If I had to give a breakup, that's what we're looking at. In terms of contribution of launches, it's around nine percent. nine percent of your H1? seven percent? Seven percent of the revenue came from new launches in first half. Okay. Sir, just one more question. You mentioned eight-ten percent is the profit share. Is it the same number for the first half also, and is there any concentration risk there, like half of the profit share coming from one product or something like that, if you want to call that out? No, sir. It's spread across different products. It's not one or two products. Different customers and different Different customers and different products. It's around, percentage-wise, this quarter, it's around eight percent. Eight percent. Okay. Sir, how much is the total investments we have made on the vaccine biosimilar so far, if you can just share that number? Yeah. So far, the plan is to invest INR 300 crores, and we have made up to now about INR 230 crores. Up to September. Balance is being made in this month. Okay. Thank you, sir. I'll just end there. Thank you. Thank you. The next question is from the line of Vishal Nandkarni from Nirmal Bang Institutional Equities. Please go ahead. Thanks for the opportunity. With respect to the complex injectable filings that you intend to do for hormonal products and a complex peptide, could you share whether these products are patent expired, and if yes, if there is existing players which have approval for the same products? You're referring to the four products we are filing? Yes, sir. The three hormonal products and 1 complex peptide, which cumulatively represents a market of $983 million. Yeah. I think one product is under patent, and the three products are open, and there are two products, they have, I think, one generic. Pardon, sir. The three products? Out of the three products, two have genericized. I think one player is there for these two products. Got it. Thank you. That's all. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. On behalf of Gland Pharma, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.