Ladies and gentlemen, good day. Welcome to the Laurus Labs Limited Q4 FY 2021 earnings call hosted by Ambit Capital Private Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during 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. Nikhil. Thank you. Over to you, sir. Yeah. Hi. Thanks a lot. Good morning, everyone. On behalf of Ambit Capital, I thank the Laurus management for giving us the opportunity to host the Q4 FY 2021 earnings call. Today on the call we have Dr. Satyanarayana Chava, Founder and CEO, and Mr. V.V. Ravi Kumar, ED and CFO. I now hand over the call to Dr. Satya for his opening remarks. Over to you, sir. Thank you, Nikhil. Thank you everyone for joining us for Q4 and annual results of FY 2021 conference call. We are pleased to have this opportunity to update our progress and answer your questions. We hope everyone and their family members, colleagues, and friends are safe during this severe second wave of COVID pandemic. To begin with, we will share the status of our locations. Our manufacturing units, R&D center, corporate office, all functioned normally during the FY 2021. At Laurus, we are committed to protecting the health and well-being of our employees and their families. We continue to implement rigorous safety and hygiene measures across all locations without any compromise. I'm extremely proud of the agility and resilience of our teams have shown in the face of this challenge since last year. I'm very thankful to all our colleagues for rising to this challenge and ensuring business continuity. Our performance focus is on growth driven by excellent execution and creating a platform for our future growth with manufacturing capacity expansions, a combination of brownfield as well as greenfield in API formulations, as well as our custom synthesis divisions. In FY 2021, we have established a wholly-owned subsidiary, Laurus Synthesis Private Limited, to take care of contract manufacturing for big pharma, and also it incorporated another step-down subsidiary named Laurus Ingredients Private Limited. These initiatives will bring focus to our contract manufacturing division to allocate, create, offer increased capacity to service customer needs. We believe by the end of FY 2023, this division, Laurus Synthesis, will be self-reliant in all respects. We have forayed into biotechnology space by acquiring a majority stake in Richcore Lifesciences Private Limited, which was renamed as Laurus Bio. The current promoters will continue to run the operations, this acquisition gives us entry into fermentation capabilities as well as foray into recombinant proteins. In the medium term, what we expect this division to be vertically integrated into offering a contract development and manufacturing services in biotech space. We are happy to share that FY 2021, Laurus Labs has done exceptionally well. Our Q4 revenues stood at INR 1,412 crores, showcasing a robust growth of 68% year-on-year. For the whole year, we have achieved INR 4,813 crores revenue with a growth of 70%. To begin with, we would like to share the key updates on our various segments. In the formulation division, we achieved INR 1,664 crores, and in the current quarter, we have done INR 430 crores revenue. The revenue contribution from the formulation division for the whole year is about 38%. Recently, we also got an approval for a triple combination antiretroviral drug containing tenofovir alafenamide. We are in the process of obtaining in-country registrations. We already got orders for this triple drug combination. We expect to service those orders in the first half of FY 2020. Apart from the LMIC business, we have also seen growth in developed markets in North America as well as in the Europe. To leverage our front-end U.S. business, we have commenced the marketing of in-licensed products. Out of five in-licensed products, two products were launched. We are in the process of launching the rest of the products in the next six months. We have a total of nine final approvals and eight tentative approvals, out of the 26 ANDAs filed so far. In Canada, we have eight approvals, and four launched, and two more products will be launched soon. For EU, we have validated additional products as part of the contract manufacturing with our partner, and we expect significant upside from these products in FY 2023. We also obtained approvals and marketing authorizations for five products. Two of those launched, and we are in the process of launching others shortly. As we informed, we continue to invest in strengthening and enhancing our formulation infrastructure. Capacity expansion through debottlenecking was operational and already commercially used right now. Our brownfield expansion on the same site with similar capacities will become operational in a phased manner from October 2021, and will be fully operational by end of FY 2022. On the R&D front, we continue to invest about 4% of our revenue. In the generic API division, this year was very good for our antiretroviral APIs. We have achieved INR 1,850 crore API sale in antiretroviral, which was the highest ARV API sale so far. Second-line ARV APIs also continued to see healthy sales in Q4. Due to the increase in the demand for third-party API sales, we are still expanding the API capacity to serve the existing demand from the customers. We expect to maintain good sales for ARV APIs in FY 2022 as well. In the oncology segment, we recorded a 5% growth in the current quarter over Q3. As you're aware, Laurus Labs has one of the largest high-potent API capacity in the country. We are expanding high-potent API manufacturing capabilities in one of our unit four at Atchutapuram. We expect oncology business to grow fairly well in the coming quarters as well. The most important piece of contract manufacturing of generic APIs and non-ARV, non-oncology, we have seen a healthy growth in Q4. We have initiated validation of several APIs, non-ARV, non-oncology. We are adding additional manufacturing capacities for these products. Our diversification efforts in generic APIs will be very visible in FY 2023, as these capacities come commercially utilized. In the synthesis division, we recorded a growth of almost 20% from Q4 FY 2020 to Q4 FY 2021. We have achieved a sales growth of over 35% when compared to FY 2020 to FY 2021. We are pursuing several active projects in the late-stage clinical programs, as well as the commercial supplies of four products which are ongoing. Construction activity is in progress at the dedicated CRAMS R&D at Genome Valley, Hyderabad. We have also acquired land for new manufacturing site, a greenfield at Vizag, which will cater to the manufacturing needs of this division for the next four to five years. We are also in the process of acquiring an additional land for this division, to manufacture steroids and hormones, high-potent molecules. That land will be at Parawada, very close to our existing manufacturing facilities. When it comes to Laurus Bio, we have closed the transaction to acquire majority stake in Richcore in the month of January. Laurus Bio is on the course of commissioning a large-scale fermentation capability, 180,000 liters, in the next two weeks. We are also planning to acquire additional land for further expansion of our Laurus Bio by creating close to 1 million liters fermentation capacity. With that, I would like to hand it over to V. V. Ravi Kumar to share the financial highlights. Thank you, Dr. Satya, very warm welcome to everyone. I wish and pray to God that everyone is safe at your home and your offices. Let me quickly take through some of the highlights. Income from operation for the quarter is at INR 1,413 crore, and it is 68% growth. For the full-year, we did about INR 4,814 crore, with growth of 70%. With a better product mix, gross margin improved significantly, now at 55% gross margin. Our EBITDA is one of the best achieved so far, is 34% for the quarter four. Our diluted EPS for the quarter before annualization is INR 5.5 crore, whereas our annual EPS for the full-year is INR 18.35. Our ROCE is 30% on annualized basis due to operational leverage and high asset utilization. On the CapEx front, we have incurred around INR 700 crore, which includes the capital work-in-progress. Out of this CapEx, we have invested 50% into the APIs, around 30% into the FDF, and 20% for contract manufacturing and bio. The 20%, probably 10% each for bio and synthesis, and we are way forward in the coming periods also, we will be spending in the similar ratios. What we are expecting CapEx in the next two years will be INR 1,500 crore-INR 1,700 crore for the two years. Why we are giving a two-year guidance is there will be spillovers from one year to the other. We have incorporated in a separate subsidiary for our Laurus Synthesis. Probably in the next two years' time, we are targeting to have an independent synthesis company. Where it has its own production, R&D, and business development. Of course, business development is separate already. It will be a very independent business unit. We want to have an integrated player as we were, That is the reason we are investing into the backward integration. We are investing into the intermediates and APIs. There's a reason 50% of the CapEx is getting into the API side. We acquired a second site for our formulations in Hyderabad already. We have not yet started the activities, We will start in the coming year. Based on the performance of the company, we have declared a third interim dividend of INR 0.80 per share. With this one and all three interim dividends together, it's coming to INR 2 crore. It's like a 100% dividend. First time our company is being offered. With this, I would request the moderator to open the lines for Q&A. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dhaval Shah from Girik Capital. Please go ahead. Hello? Hello, am I on? Yeah. Good morning. Yeah. Good morning, team. Yes, it's a couple of questions from my side. Sir, firstly, on the CapEx, just want to clarify, you mentioned INR 15-1,700 crores over FY 2022 and 2023. Am I correct? You are right. That's the plan as of now, to invest an additional INR 1,500 crores in FY 2023 and FY 2022 put together. Yeah, 2022, 2023 put together. Correct. From the last two con calls, what we have mentioned, is there an increase in the amount? We have increased the CapEx based on visibility what we have, in the API division as well as formulation division, based on the estimated approvals. We are investing significantly into custom synthesis based on certain projects we need to execute at a new manufacturing site, depending on the volumes. We have increased CapEx by around INR 500 crore than what we have indicated earlier. Correct Increase is based on the visibility, what we have right now from the customers and projects what we are handling. Yes. It was around INR 1,100 crore before. Yeah. Yeah. It's partly added from the Bio also. Okay, Bio, how much you would be allocating? Bio, this year, around INR 60 crores. Okay. 22 will be INR 60 crores. Okay. Majority is coming from API. I would say, if we want to put an order of investment, the majority will go to API, and then next to our CRAMS division, and then formulations. Got it. Sir, the question on the segmental numbers. Formulation we did around INR 430 crore. I believe there was some debottlenecking done. Is the impact yet to be seen in the number because we are flat quarter-on-quarter? Debottlenecking operation was completed in the month of March, and qualifications were done. That came into commercial use only in the current month, April. That will be used in the first two quarters, and from quarter three onwards, we do expect a significant increase in our formulation capacity because we will be using the very large-scale new building by October. Okay. Sir, under the API and the others category, you've seen a big traction, like INR 166 crore quarterly run rate now. Any one-off in this? How should we look at this number? When it comes to the other APIs, it consists of contract manufacturing of generic APIs to other generic customers. This segment, you have to see as a whole year rather than quarter-to-quarter. This year, FY 2022 and FY 2023, most of our CapEx in API division is for non-ARV, non-oncology. Non-ARV APIs will see significant sales increase partly in FY 2022, but big jump will come in FY 2023. Okay. You mean we did around INR 500 crore in the other category for FY 2021. This number should significantly increase in 2020 and more in 2023. Absolutely. Yeah. Okay. Sir, there's today article in newspaper that China has reduced or stopped the cargo planes to India. How is the impact you read for the pharmaceutical company in the current time when you have to meet demand, a lot of pandemic-led demand also, plus our exports demand? Is there a big impact on us as still we depend a lot on China for KSM, couple of intermediaries, APIs? We do depend on China for our starting materials, which generally we get through sea shipments. If it is an intermediate, people do get by air, but most of our shipments come by sea. We haven't seen any impact of the logistics challenges. The one thing is logistics costs have gone up in the recent past. Other than that, we haven't seen any disruption which is going to affect our manufacturing in the near future. Okay, sir. Got it, sir. Thank you very much. I'll come back in the queue. Thank you. Thank you. Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, would request you to rejoin the queue. The next question is from the line of Sudarshan Padmanabhan from Sundaram Mutual Fund. Please go ahead. Thank you for taking my questions. Congrats on great set of numbers. Sir, my question is to understand this investment that you're doing in non-ARV, both with the FDF and the non-FDF coming together. You have given fair amount of threadbare discussion on the CDMO CRAMS business. I understand that we are looking at almost 50 active projects and four projects almost at commercial level. We also developing fair amount of strengths in high-potent as well as chiral chemistry. From the current level of, say, INR 500 crore-INR 600 crore, say, in the next two to three years, where do we see this business? Also from a longer-term perspective, how do we see this business panning out for us as well as the industry? This custom synthesis project, unless the project goes into commercial phase, it is very difficult to project. That is the reason we have to do as many number of projects as possible to see success here. We are doing good number of projects in the late-stage clinical phase right now, for which we are building capacities, especially in high-potent. We are building large-scale capacity for NDA batches. We also in the process of building large capacity for steroids and hormones as well. We cannot give a guidance on where this division will be in next two years, but we are very bullish on this division. That's the reason we have initiated construction of a dedicated CRAMS R&D with an investment of close to INR 150 crores, with 2 lakh sq ft R&D. We acquired land for this division, and we are in the process of acquiring another piece of land for this division. That shows our confidence and conviction that this division will grow significantly in the near future. Sure, sir. Sir, with respect to the FDF, given that the debottlenecking is going to come this quarter and also the large capacity is coming in the second half, how do we see the traction to happen, sir? Last time we were continuously surprised with the numbers that came in on the formulation side. Should we assume a quick, say for the next two years, we should be able to completely utilize the capacity? As and when the capacity is qualified and ready to go commercial, we have products to be made there. The increased capacity, we have visibility that we will use pretty well, significantly. Yeah. Yeah. This triple combination, where do we see, sir, this market from the FDF side? This triple combination, we do expect this year could be a $10 million opportunity for us in formulations, but next year could be big. Okay. Yeah. Out of INR 10 million, we have order for almost half of that. We will service before September, and we do anticipate some additional orders for that. The big revenue is coming from the most popular triple combination drug, TLD, which we are servicing, and our supply commitment is very, very good. Our OTIF score, on-time and full score, is also close to 100. Sure. One final question from my side is with the INR 1,700 crores of CapEx that we are seeing, I think in various forums, we have talked about somewhat aspiration of a billion-dollar sale, say, in the next couple of years. Would this CapEx more or less suffice for us to take us to that billion-dollar sales in the next couple of years, or should we do additional CapEx for this, sir? Actually, the part of the CapEx which we'll do in FY 2023 will not be used in FY 2023. I think to achieve that aspiration number, we don't need more CapEx. We don't need. I want to make it clear. Yeah. Thanks a lot, sir. That is largely from me. Yeah. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah, thanks for the opportunity. Just on the Richcore side, now that acquisition is done and we have a visibility, clarity in terms of the new facility ramping up. Any color you would like to give, like how the revenue would shape up from this facility? The Richcore, the Laurus Bio new facility will go commercial in the next two weeks, actually by 15th of May. Right. By September, entire facility will go commercial. We are putting four fermenters of 45,000 L each. Two fermenters will go commercial in May, and two more fermenters will go commercial in the month of August, September. We have order book for all those capacity. We are also in discussion with current partners, and we are in the process of acquiring additional land, and we will create probably a million liter fermentation capacity in the next growth. Right. For this existing four reactors, now that order book is in place, the revenue visibility would also be there, I presume. Any number you would want to put to that in terms of sales potential? We're not giving a number, see, we hope we will double the revenue in the division, at least in FY 2022 itself. Got it. Just lastly on this, to create this 1,000,000 L capacity, incremental investment, that INR 60 crore would be good enough, or you will need more? 60 crore is for the current 180,000 L fermentation capacity. For 1,000,000 L, we are in the just drawing board stage, what could be the size of the fermenters and all. Maybe we will be able to provide you with a number in the next six months. Got it. This INR 1,500 crore CapEx for two years, kind of that building the investment for this 1 million liter, no? Partly considered, but that is the reason we're giving a range between INR 1,500 crore-INR 700 crore. Understood. Just lastly on formulation, just for clarity out here, how has been the volume growth and the price growth for the last three quarters where the revenue has been more or less stable? Tushar, your question was not audible. Can you repeat your question please? On the formulation side, for the past three quarters, just would like to understand how has been the volume growth and the price growth in the FDF segment? It's volume growth. Our revenues is coming from volume growth. We haven't increased any price for any of our PEPFAR formulations in FY 2021. It is only coming from volume growth, and product expansion and volume growth. Understood. Thanks a lot for this. Thanks, Tushar. Thank you. The next question is from the line of Krish Mehta from Enam Holdings. Please go ahead. Yeah, thank you for taking my question, and congratulations on these stellar numbers. I have two questions. The first one is, what is the percentage of non-ARV revenues for Q4 FY 2021 and for the entire year- end 2021? Non-ARV revenues are out of INR 1,413 crores of total company's revenue, INR 570 crores came from ARVs. 40%. About 40%. 60% is non-ARV revenue in Q4, Krish. Okay. What is the expectation for non-ARV revenues going forward for FY 2022? FY 2022, we are not expecting major diversification of revenues. The FY 2022 revenue base will be very similar to FY 2021. We do believe FY 2023, good diversification will happen, and we are working towards completely diversification of revenues by FY 2025. That will be visible from FY 2023 onwards. Okay. Thank you so much. Thank you, Krish. Thank you. Thank you. The next question is from the line of Bharat Kumar from Quest for Value. Please go ahead. Congratulations, Dr. Satya, on good set of numbers. My question is regarding custom synthesis. The current share of custom synthesis is around 10%. In an interview with the media a couple of months back, you said that four to five years down the line, the share of custom synthesis, which is very high-margin business, would be around 20%. It's almost double the share. It means the growth in custom synthesis would outpace the growth in API and formulations. Already API and formulations for Laurus is growing at very high rate. What I'm not clear is what makes you to be so bullish in custom synthesis segment to grow faster than API and formulations? I understand that you already answered this question saying you have some late-stage molecules and all, but how many molecules and all, can you give some visibility on that? We can't give you these details of what molecules, what phase, and all. We are very hopeful FY 2023 onwards, our custom synthesis growth will definitely outpace rest of the divisions. Mm-hmm. This would be from the Vizag manufacturing plant, is it? Yes, that is the reason we are investing in capacities in this division. Once the capacities come commercial, I'm sure the growth in this division will be very good. Yeah. Got it. Once Vizag plant is commercial, then you have more growth in this custom synthesis, right? Thanks. You are right. Yeah. Also you have a new R&D for custom synthesis in Hyderabad. That is mainly for the CRO services? We are not doing any FTE service. Okay. This is to do CDMO. We don't do any FTE business. Okay. Yeah. Dedicated site for CRAMS business. Okay. Got it. My second question is regarding Laurus Bio. Where do you see Laurus Bio in three to four years from now? How much Laurus Bio would be contributing in terms of percentage to the top line three to four years from now? That's a difficult question. Right now, the Laurus Bio FY 2021 is about INR 50 crore revenue. That is about 1.2% of our revenue. Will it be 10% of revenue in three years? I doubt. Will INR 50 crore become INR 200 crore, INR 300 crore? Probably, yes. That division's growth, we need to attract big customers, and we do expect we need another four, five years to make that division also very sizable. If you look at our CRAMS division, was moderate right now, but it will become a sizable in next couple of years. It took seven, eight years for us to nurture the division. We will start putting our resources, our thoughts, our strategy execution into the division. Will become sizable in the next five to six years. Okay. Got it. Yeah. Thank you very much, sir. That's it. Yeah. Thank you. Thank you, Bharat. Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, would request you to rejoin the queue. The next question is from the line of Arun Barik from Choice Broking. Please go ahead. Hello. Thank you for taking my question, and congratulations on a very good set of numbers. I just wanted to know, we have achieved the highest EBITDA margins ever. Just wanted to know, can we sustain these kind of margins or should we assume that we have peaked out or going forward, the margins would be continued to coming from the product mix or from the cost rationalization? How should we assume? If you can throw some color on that. As we are mentioning in the previous calls also, we are confident to maintain 30% EBITDA numbers for the FY 2022. From FY 2023 onwards, we do expect to maintain the same profit ratios. Okay. On the pricing side, we have not taken any price hike in FY 2021. Do we want to take any price hike in FY 2022? See, our growth is not driven by price hikes. Yeah people think growing business by hiking prices. We want to grow business, make more money by increasing our product basket, increasing our market share. Our growth will be primarily driven by market share gain and portfolio enhancement, not by price hike. We haven't done that in FY 2021. I do believe we will never do that in FY 2022 also. Yeah. Okay. That's it from my side. Thank you. Thank you, Arun. Thank you. The next question is from the line of Ranveer Singh from Sunidhi Securities. Please go ahead. Yeah. Thanks for taking my question. My question is around ARV API. This time, the growth has been led by volume. What has been the growth in volume and price? If you could give some ballpark number. This year, the significant revenue increase in ARV APIs came only because of volume gain. Earlier, we used to supply one or two APIs of the fixed-dose combination, three-drug combination. In the most recent year, for the triple-drug combination, we got approvals for all the three APIs in the triple-drug combination. That's the reason our volume in ARV APIs went up significantly, which led to growth. We do anticipate continue to have the same momentum in FY 2022 also. We don't see that there is one-off in our ARV APIs. Yeah, sir. Just wanted to understand that macro scene. In ARV API, why this volume growth has suddenly been so high in this year? Is there any supplier from China or anybody has stopped supplying in API segment? I think the ARV market itself has not grown, especially during this COVID-related impact. In this scenario, what actually has led this volume growth, and whether this will sustain? The one reason for volume growth, earlier, the most preferred treatment was efavirenz-based, where we don't have many approvals for lamivudine or tenofovir from many customers. When the therapy moved from efavirenz-based to dolutegravir-based, we got approvals for lamivudine and tenofovir with most of the customers. People started buying three APIs, dolutegravir, lamivudine, tenofovir from us, where earlier people used to buy majority efavirenz and some tenofovir. That's the primary reason for our volume growth last year. Okay, it's a preference of product for consumers. Yes. Okay. You said that in 2023, diversification in API we will see. Despite this diversification, our EBITDA margin would be the same, or we see some negative or positive impact due to this diversification? We don't see any dilution of margins because of diversification. Diversification means we have to look at, there is a limited growth in ARV APIs right now. We are already having a lion share of market, it is not easy to grow beyond. We are adding diabetic segment, cardiovascular segment, which will be commercialized beginning last quarter FY 2022 onwards. That's the reason we're investing more into non-ARV API infrastructure. Even our formulation also, most of the brownfield expansion, what we are doing right now, will be used for non-ARVs. Okay. The last one, can you give just broad breakup of CapEx INR 1,500-1,700 crore you mentioned? How much of would be on FTE and API and synthesis? It is 50% is going into API intermediates, and then maybe 25% in FDF, and 25% in custom synthesis. That's the broad breakup. Okay. That's it from my side. Thank you. Thank you. Thank you. The next question is from the line of Nimish Mehta from Research Delta Advisors. Please go ahead. Yeah, thanks for the opportunity, congrats on the great set of numbers. Just to continue from the previous participant, you mentioned that the growth in formulation has been driven by the shift in the product choice from efavirenz-based to dolutegravir-based and DTG-based. How do you think What is the scope of further growth in terms of this shift happening? What is the competition outlook there? Are we likely to continue higher market share in the expanded market? That would be great for me to understand. Nimish, we will see some growth both in ARV APIs as well as formulations in FY 2022. FY 2023 onwards, the growth will be driven by non-ARVs, both in APIs as well as in formulations. From FY 2020 to FY 2021, the majority growth came from therapy shift from efavirenz-based to dolutegravir-based. Once that is done, we do have the product basket. Even there is a shift from one therapy to another therapy in ARVs, we are fully prepared to take that opportunity to our favor. Correct. What I'm trying to understand is the shift towards dolutegravir-based therapy, has that kind of peaked in the sense, there is no more increase in DTG-based therapy over efavirenz-based? Have we reached that point, or you still see that is yet some far away, and that is for the scope of growth in that category, the DTG category? Not just for Laurus, but in general, is the DTG category likely to grow? Based on the reports, the DTG penetration will continue to increase in this year as well as next year. Okay. The other thing I just wanted to know, in the API segment, I think we are a leader or an expert in antiviral medication drug. Are we not seeing any opportunity related to COVID drugs where the API price from 2022 where many of these protein inhibitors are now being touted as the potential drug for COVID, like and all of those things? Do we not see an opportunity there, if maybe older drugs or new drugs that's COVID-related opportunity? Finally, if you can also let us know the opportunity related to REVLIMID manufacturing of API. Thank you very much. At the beginning of the COVID crisis, we produced hydroxychloroquine sulfate, but it was never became popular. We never had any significant sales coming out of that. Other than that, we haven't made any COVID-related APIs or formulations, and we are not planning to do that also. For any particular reason? Because that looks like to be one of the fastest. You can correct me if my understanding is wrong. I see Laurus as an expert in antiviral medications or drug. Like, why not? We are operating our capacities fully. For us to divert these capacities for any opportunities, we have to miss our commitments to existing suppliers on ARVs. You know ARVs is equally important for 20 million patients. Our commitment to supply ARVs on time, we honored in the COVID crisis. We looked at, but we were, I would say we wouldn't get an opportunity to serve. I'll put it that way. Yeah. Okay. Finally, a word on the REVLIMID API opportunity now that REVLIMID is likely to make the U.S. generic market next year. Your thoughts on that for our team, for Laurus team? Nimish, we didn't get the name of the API you are talking about. I'm talking about lenalidomide. Praveen Moolna? Can you say clearly? lenalidomide Lenalidomide. Okay, we are talking about that. No, we don't have any DMF in U.S., we can't comment on that right now. Yeah. Okay. Thank you. Thank you. Thank you. The next question is from the line of T. Srihari from PCS Securities. Please go ahead. Mr. Srihari, your line is unmuted. Please go ahead with your question. There is no response from the line of the current participant. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks for taking my question. Satya, on the formulation business, in for FY 2021, what will be the typical composition of this business? How much would be LMIC business of this segment? Nitin, the broad split is three-fourth in LMIC and one-fourth in Europe and North America. We do anticipate similar, actually 70/30 in FY 2022. FY 2023 onwards, we do expect it will go to two-third/one-third. As we mentioned, the formulation diversification benefits will start showing in FY 2023 onwards. FY 2023, we do expect 70/30. From 75/25, it will be 70/30. In FY 2023, that will be even bigger, we will have maybe 60/40 in FY 2023. On the LMIC business, do we see opportunities for further growth from where we are? How much further can this seed grow on from here? When we're saying the percentage is coming down, that doesn't mean the number is going down, Nitin. We are increasing our revenue significantly. That is the reason it's coming down. We do anticipate growth in LMIC market when compared to FY 2021 to 2022. We see good growth in FY 2022. We do some growth in FY 2023 also. The other non-ARV, non-LMIC business will grow significantly in FY 2023 based on the product launch we have filed, what we are going to file. Doctor, on that point, on the non-LMIC business, what proportion of this business, largely going to be developed market business or U.S. and Canada, European business that will drive it? What will drive the non-LMIC business for us from 2023 onwards? Non-LMIC business is only from Europe and North America. Nothing else for us. That is based on the visibility of the ANDA. These are all products that will be under our own ANDA or our own filing. Yes. They are fully integrated offerings we take. Sir, where do we capture the contract manufacturing for formulations, or is there a business like that? There are three types of contract manufacturing we're doing. Contract manufacturing, generic APIs will come in generic APIs itself. We do contract manufacturing of formulations, generic formulations, that comes in formulations division. The contract manufacturing clinical programs, it comes in Synthesis division. Sir, how big is this contract manufacturing for formulations in the formulation business? Most of our European sale, as of now, is contract manufacturing. Okay. Got it. Thank you, sir. Thank you. Thank you. The next question is from the line of Tushar Bohra from MK Ventures. Please go ahead. Morning. Thank you for the opportunity, and congratulations to management for a very good set of numbers. Sir, I wanted to understand, when we discuss custom synthesis, are we including the specific opportunities in cosmeceuticals and nutraceuticals within that? If you can just help understand if there are any significant triggers in this part of the business. That's one. Second, I wanted to understand, are there any vaccine-related opportunities, like as an adjuvant or any such opportunities for Laurus going forward that we are exploring? I'll answer the first question. Whatever the nutraceuticals dietary supplement we sell to multiple customers is not part of the Synthesis business. Any product we make exclusive to one customer will be part of the Synthesis business. We are putting those one customer exclusive products will be in Synthesis business. When we sell to multiple customers, that is not part of that. The second question, are we making anything for vaccine business? Our Bio division makes cell culture ingredients which are used in the vaccine manufacturing. We are not making adjuvants right now. Okay. Is there a COVID-related vaccine play also then for our bio division? If not now, in future, are we exploring? I don't think we will be catching the COVID vaccine wave by supplying ingredients from bio division. I don't think that will be an opportunity for us. Sure. Sir, second, we mentioned the sterile facility. We are setting up a plant specifically for steriles and hormones. In previous calls, we had mentioned the possibility of an M&A in this space. Does this investment preclude that M&A activity, or is that something we are also looking at in parallel? I didn't remember we mentioned M&A activity in steriles and hormones. Our investments into steriles and hormones is based on our discussions with the potential customer and the volumes, what we're talking. We need a specific exclusive capacity for steriles and hormones. We're investing based on our discussions, what we are doing with a potential customer. Okay. Sure, sir. Just one last on the overall capacity constraints that we've been facing and the continuous upward revision in CapEx, why haven't we looked at, say, acquiring plants, U.S. FDA-designated plants? I'm sure that there would be a few available. Have we explored that route to augment capacity faster? We looked at earlier. We believe building our own capacity is much more cost-effective. See, no capacity will come at 1x of sales. Whereas our asset turnover ratio is 1.5 right now. We believe putting CapEx, greenfield or brownfield, to enhance capacity is much more cost-effective than acquisition. Sure, sir. A clarification on one of the points you mentioned in the call. This INR 1,500-INR 1,700 CapEx over FY 2020-2023 is not likely to be contributing, or at least the FY 2023 portion is not going to contribute to your INR 1 billion revenue target. That's the point you mentioned, right? Part of it will not be required to go to the target. What we do in FY 2023 will not be fully utilized in FY 2023 itself. Okay. Fair enough, sir. Thank you very much. I'll join back in the queue. Thank you, Tushar. Thank you. The next question is from the line of Ankush Aggarwal, an individual investor. Please go ahead. Yeah. Hi. Thank you for taking my question, sir. Just one question. We have been taking a stance that ARV as a business will not grow much for us, given that we're already a big player in the market. For Laurus to grow at a high rate, our other business of non-ARV and business at very faster pace, because non-ARV business still relatively small for us, like around 25%, 30%. What are the initiatives and objectives that you're targeting over next couple of years for this business to grow that fast? If you can highlight those. There are two things. Non-ARV API and formulation growth, we already developed the products. We have filed DMF. We have filed dossiers for marketing authorizations. That is already, I would say, midway in that diversification. When it comes to the custom synthesis investment in what we are doing, half of it based on some kind of a commitments what we are having from our customers with respect to capacity, and the rest is to increase the product portfolio in custom synthesis. Not every product will go to commercial when we do phase I. We wanted to increase our phase I pipeline. Right now, we are constrained to take more phase I projects. That is the reason we are creating a dedicated capacity. Right now, when there is a project, allocation of resources is becoming a challenge, both in R&D and in manufacturing. We wanted to take away that constraint and bring some abundancy. We are creating INR 2 lakh SFT R&D for CRAMS, and we are creating two new sites for the CRAMS division. By FY 2023, CRAMS division will have three manufacturing sites, hopefully four, and an R&D center. That will be a fairly big organization itself. Okay, got it. Secondly, on the FDF business, the entire growth we are targeting for next couple of years is on the contract manufacturing or possibly with the European customers wherein we are adding more products, right? No. Majority growth will come from non-contract manufacturing. Okay, this is apart from the portion that we will have based on the European customer with the added capacity that we're adding. We'll grow contract manufacturing, but the non-contract manufacturing revenues in formulations also will be significant. Oh, okay. Got it. Thank you much. Thank you so much. Thank you. Thank you. The next question is from the line of Onkar Ghugardare from Shree Consultancy. Please go ahead. Yeah. Based on the CapEx number you talked about for the next two years, what kind of a return you are expecting on that? We can give a broad number, Onkar. It's about 1.5, what we have achieved right now. You can expect that. Okay. What would be the maximum revenue potential in that? Expecting 100% capacity utilization. Do a math. See, 1,500 into 1.4, 1.5, that could be the opportunity. We continue to invest. If we stop investing, how we will grow? For these investments, we are not raising debt. Probably everything will be done through internal accruals. We also need to be careful when our ROCE and return on equity numbers are so high and our cost of debt is so low. The question and challenge for us is to go for CapEx, which is giving very high, good returns versus retiring our debt. See, our debt by EBITDA is less than one, 0.9. Little over 0.9. We are doing that constant debate internally, whether to retire debt or to put more CapEx. We are very cautious in putting CapEx. See, why we will do recklessly CapEx? We are doing CapEx because we have seen visibility, customers are asking for it. We know what to make. We know whom to sell. Because of those comforts, we are investing in CapEx. Okay. The second question is, you have been selling stake in the open market to reduce the edge, which you have done. What would be the plan on that front? There is no pledge of shares from my side. Everything was removed. Okay. Thank you. Thank you. Thank you. The next question is from the line of Gagan Thareja from Kotak. Please go ahead. Am I audible? Hello? Sir, your voice is not audible, sir. Am I audible now? Yes. Yes, Gagan. Yeah. Sir, just wanted to clarify. There will not be any additional debt for the CapEx that you are undertaking next two years? Gagan, it is not very audible. There may not be any significant debt increase. Okay. Yep. Also, there will be probably a fixed cost increase as the CapEx comes in. If you could give some idea of the OpEx with depreciation which will come in because of the additional capacity? Can you repeat your question? Your question is not very clear. Your voice is not very clear. My question is that with the additional CapEx, there will be additional OpEx and depreciation also coming in. What could be the magnitude of OpEx and depreciation related to the additional capacity? The most of it is a brownfield. It is in a proportionate to the CapEx and the operations utilization. I'll answer, Gagan, to your question. In FY 2018, 2019, we have created so many greenfield facilities had an impact on our OpEx, depreciation in our PAT numbers. This time, most of the expansion is happening in the brownfield, and we don't see the investment impacting our numbers from now onwards. Okay. For your LMIC formulation suite, I think this year all the sales could have been from the TLE combination. You also have the approval for TLE 400, where from a competitive standpoint, it's probably a better market, although probably of a lower size. If you could give some idea of what could be the size for the TLE 400 market going into next year. We can give you the TLE 400 usage in general. We will not give you what market share we have. It is between $120 million-$150 million TLE 400 opportunity. Okay. Yeah. Okay. TLE 600? TLE 600, the opportunity is very small. Okay. Yeah. TLE 400, the number of approved companies would be only two to three at most? Yeah. Three as of now. Okay. You also indicated you have the approval for TAF-based formulations, if I understood it correctly, or is it for the API you are talking of? We got approval for dolutegravir/emtricitabine TAF NDA, and we also got orders. We also got orders for these formulations, and we will service that in the next six months. We do expect more orders for that. Okay. On TAF, just wanted your expert opinion. What I am able to understand is that because of TAF, the weight gain, especially in the female cohort of the African population is very high, north of 10 kgs. That's a concern for comorbidities. Do you confirm that? Therefore, do you see that being a limited sort of market right now, or do you see this as a product that will substitute TDF in a very big way going ahead? See, the difference between switch from efavirenz to dolutegravir is a class. Efavirenz is a NNRTI and dolutegravir is integrase inhibitor. When it comes to tenofovir and TAF, these are same class. We don't see the disruption like efavirenz to tenofovir, efavirenz to dolutegravir similar to TDF and TAF. Yeah. Okay. Thank you, sir. That's all from my side. Thank you. The next question is from the line of Tarang from Old Bridge Capital. Please go ahead. Hello, sir. Good afternoon. Just was reconciling some numbers. Laurus today would have a gross block of about INR 2,600 crores, and there's about a CWIP of INR 400 crores, so that's INR 3,000 crores. About INR 1,500 crores of CapEx going in the next two years, part of which will not help in revenue in FY 2023. If I add all of this up, about INR 4,000 crores of gross block. 1.5x would translate about INR 6,000 crores-INR 6,200 crores of revenue. Whereas you've been indicating that maybe this asset base could help us reach about INR 1 billion of revenue. Where is the disconnect, sir? You're talking about net block probably. Our gross block could be bigger than INR 4,000 crores. If you take INR 1,500 additional CapEx, it'll be maybe close to INR 5,000 crore gross block. Okay. Yeah. That's the math, INR 5,000 crores of gross block and 1.5x. Yeah. Correct? Yeah. Okay. Thank you. Thank you. The last question is from the line of Prashant Rane from Exclusive Advisors. Please go ahead. Thank you for the opportunity and congratulations for great set of numbers. My question is about what we are expanding our businesses in so many new areas, and there are a lot of challenges which will be going ahead. How it works out in terms of management bandwidth and attracting talent. I saw the ESOP plan. I would like to know the management views about it. Do you think this ESOP is one-off to dilution or it is going to be a feature for attracting talent? Thank you. Thanks for asking a very interesting question, Prashant. We continuously allocate stock options to attract, retain talent. We are setting a benchmark in the pharma industry with the number of stock options and the value of the stock options, what we have given to our colleagues. Right now, we are not seeing any challenge in attracting talent in any of these divisions. We constantly in lookout for adding mid to senior management talent in all the divisions, and we continue to add that. See, one good thing is, we are not in the process of adding hundreds of ANDAs. We are not having the strategy of filing hundreds of DMFs. Our approach is develop few products, maximize those products into many geographies and get leadership position and gain market share. With that, our commitment to scale, commitment to quality is very well appreciated across the industry, and that is helping us to retain talent very well. Is that revenue per employee, is that the metric which you track internally? Pardon, Prashant? Yeah. Revenues per employee, is that the metric which you track internally? If you can also answer about the management bandwidth going ahead, is it sufficient or you expect some organization changes? We do monitor revenue per employee, EBITDA per employee, since inception. Currently, our revenue per employee is little over a crore per employee. When it comes to the bandwidth, if you look at our Richcore acquisition, we didn't acquire a company, we acquired the talent. In fact, the current leadership team and the founders will continue to run. There, we don't see any management bandwidth challenge. When it comes to the other business, we are running the same business, adding more blocks, more products. We are adding talent. Currently, we don't see any challenge in senior management bandwidth right now. Yeah. Thank you. All the best. Thank you, Prashant. Yes. Thank you. I would now like to hand the conference over to the management for closing comments. Thank you, Nikhil, for organizing this call, and thank you all of you for participating and giving us your perspective how we should perform and how we should invest. Thank you, and keep safe during this pandemic. Thank you. Thank you. Thank you. On behalf of Ambit Capital Private Limited, this concludes this conference. Thank you for joining us, and you may now disconnect your lines.