Ladies and gentlemen, good day and welcome to the Laurus Labs Limited Q4 and full year FY 2023 earnings conference call, hosted by Antique Stock Broking 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, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Monish Shah from Antique Stock Broking. Thank you, and over to you, sir. Thank you, Darwin. Good evening, everyone, and welcome to Laurus Labs Q4 FY 2023 results conference call. We thank the management for giving us the opportunity to host this call. Today we have with us, Dr. Satyanarayana Chava, Founder and CEO, and Mr. V.V. Ravi Kumar, Executive Director and CFO. I will now hand the call over to Dr. Satya for his opening remarks. Thank you, and over to you, sir. Thank you, Monish. Thank you all of you, investors joining us for our Q4 and full year FY 2023 results conference call. We are pleased to have this opportunity to update you on our progress and answer your questions. FY 2023 has been a year of significant achievements and meaningful progress for Laurus Labs in light of a challenging environment globally. Our R&D-driven manufacturing strategy across our key growth pillars did very well. I'm glad that our team has delivered on several scientific and operational milestones. We are on track with our diversification roadmap and executing on opportunities ahead of us today, and at the same time focusing on what matters for the long term. Some of these initiatives have started giving results, especially in our CMO and CDMO business. We made significant progress in FY 2023, advancing our scientific capability in offering several key technologies to global customers, including access to technologies like continuous flow chemistry at lab and commercial scale, biocatalysis, continuous chromatography, enzyme development and manufacturing, precision fermentation, just to name a few. We secured an important breakthrough with a major big pharma, with record delivery of a large purchase order, plus several pipeline projects from big and medium-sized discovery companies. Revenue from animal health products expected from second half of FY 2024. We also made important internal success with broadening pipeline products, collaborations, process efficiencies, innovative drug product platforms in new sterile lab and qualified new capacities for commercial APIs and intermediate production. We are confident in the underlying demand for our portfolio and making efficient use of strongly linked technology platforms, customer centricity, and manufacturing excellence to seize new business opportunities and widening our target markets across human health, animal health, agrochemicals, and consumer health. We wanted to provide an update on our strategic collaboration with cell and gene therapy platform company, ImmunoACT. We are making very good progress and our investment has supported establishing a state-of-the-art GMP CAR-T cell therapy facility in Mumbai. They have also initiated a phase II for HCAR-19 in lymphoma and leukemia post positive phase I data. We'll continue following our disciplined approach to investments in disruptive technologies, and we will act when scientific opportunity and value align together. We have remained focused on the long-term growth and success by delivering on existing CapEx projects. Throughout FY 2023, we invested heavily into strategic growth opportunities. We have increased our API /Drug substance capacities by 30% during FY 2023, and these capacities are in various stages of ramp up for commercial production. Our CDMO investment is also to capture high-value opportunities is progressing very well. We are entering FY 2024 with greater confidence that we are creating a sustainable engine that will bring greater business resilience and generate long-term sustainable value to our stakeholders. Moving on to our financial results. Despite the challenges in the business environment, the company achieved strong growth in revenues by 22% to INR 6,041 crores and an EBITDA of close to INR 69 crores, INR 1,594 crores precisely, delivering a margin of 26%. The growth we experienced in FY 2023 reflects fundamental strength of our key growth pillars, CDMO, generics, other than antiretrovirals. The strong growth was after taking into account unexpected and severe pricing led impact in ARV formulations as well as APIs. We believe this began to stabilize and our Q4 results was challenging, driven by completion of material purchase order supplies last quarter and higher upfront costs on growth projects. We reported INR 1,381 crores in revenues, representing a 4% revenue decline. If you look at from FY 2018 to 2023 overall, we had a strong cumulative performance. We have delivered diversified business growth, strong double-digit sales growth of 22% CAGR, and EBITDA margin improved by over 500 basis points. In the period FY 2018 to 2023, share of non-ARV business improved from 27% to 60%. That was a big achievement for us. Going into detailed performance update, I would like to share key updates on our formulations business. In line with expectations, formulation division continued to recover sequentially and reported overall revenues of INR 1,140 crore for full year. It declined almost 40% versus FY 2022. The year-on-year sales was impacted mainly due to severe price fall and soft demand of ARV formulations. We remain intensely focused to stabilize ARV business throughout FY 2024 and beyond, while navigating pricing headwinds created by the competition. We have successfully implemented several measures around expansive portfolio and cost improvements. We believe these measures will sufficiently ensure our market readiness and confidence of sustaining our leadership in first-line ARV treatment, both in APIs as well as formulations. Coming to the developed market, we continue to perform well across our portfolio despite higher competitive intensity. During FY 2023, we filed 13 dossiers in the developed markets, six in U.S., four in Europe, and three in Canada. In U.S., we continue to get good market share on select products and also increasing volumes for our recently launched products. During the quarter four, we filed one ANDA, taking the total filing to six for FY 2023. Cumulatively, we have 37 ANDAs. Of this, we have a total 14 final approvals and 12 pending to be approved. We continue to have a diverse portfolio of products, including 505 and ARVs, cardiovascular, CNS, and GI products. In Canada, we filed 1 product during quarter four, taking the total of 20 filings. Of those, we got 13 approvals and nine were launched, and we expect to launch three more during FY 2024. In the E.U., we have a basket of 12 approved products, out of which six were launched. We have continued to deepen our contract manufacturing relationship through FY 2024 and anticipate more volumes in the coming quarters. During the year, we invested significantly into expanding our non-ARV formulation infrastructure with a total commissioned capacity of 10 billion units. We anticipate that some of these branching capacities that we added during this year should start to get better utilized during FY 2024 as we begin to see better demand visibility in ARV business, CMO portfolio, and key product approvals across U.S., Europe, and Canada. On the R&D front, our overall R&D spend to sales was about 3.5%. We continue to make good progress and invest in portfolio with product-specific approach based on complexity and economies of scale. During FY 2023, we filed our first NDA for novel HIV pediatric product using oral dissolving films technology. We intend to maximize opportunity by leveraging this platform to create innovative pipeline in other therapeutic areas. Our sterile R&D labs, which got commissioned during the mid-2022, is already working on several priority projects. We have a total of over 60 products in the R&D pipeline, either in review or in development, having addressable market size of over $14 billion. We have filed so far 37 ANDAs in U.S., 15 dossiers in Europe, 20 in Canada, nine with WHO, seven dossiers in South Africa, one dossier in Australia, 20 dossiers in India, and 23 products filed in various ROW markets. As we explained multiple times, our approach remains product-specific, not market-specific. Going to generic API, our generic API division during FY 2023 reported strong and all-round growth of 28% to INR 2,609 crores, supported by continued CMO opportunities in API, APIs, as well as healthy growth in non-ARVs as well as onco APIs. Our antiviral API business delivered 21% growth, and we achieved INR 1,51 3 crores. This growth was partially due to low base effect, which was impacted by channel destocking. We continue to maintain a leading market share in the current product line. Onco API business reported a growth of 10% during FY 2023 at INR 318 crores. Q4 saw strong recovery following uptake in one of the key products. As all our stakeholders are aware, Laurus Labs has one of the largest high-potent API capacities in India, and are aimed to strengthen this further by partnering with the global companies. Non-ARV, non-onco business also did very well, which includes cardiovascular, diabetes, and asthma products. We have seen steady ramp-up of these products for the quarter and full year at 2023. During Q4, this segment reported INR 230 crores sales, growing at about 38% year-on-year. FY 2023, the growth is robust at more than 50%, supported by continued ramp-up in new contract supplies. In Q4, we filed two DMFs. In the full year, we filed six DMFs. All are in non-ARV category. With this total number of DMFs filed to date is 79. We also are working with few more generic customers for CMO opportunities, and some of them are in very advanced stage of implementation. During the year, our synthesis business recorded a sales of INR 2,167 crores, representing an increase of over 136% year-on-year. This growth was driven by high quality delivery of a large order on time and accelerated demand from existing and key projects from new customers. We have further strengthened our partnership and signed several new clinical stage projects with a few big pharma customers. We continue to work on over 60 active projects and ongoing commercial supplies for about 10 products, including key APIs as well as several advanced intermediates. As indicated earlier, we are making good progress on new sites for CDMO division, both R&D center as well as manufacturing facility for animal health. New sites will have capabilities to handle steroids, hormones, and high-potential molecules apart from large volume products. Commercial GMP manufacturing of animal health products will begin during the second half of FY 2024. Going on to Laurus Bio. The Bio generated a full year with reported strong growth of 21% at INR 125 crores for the entire year. The growth was driven by substantial increase in the uptake of CDMO business. During FY 2023, we have enhanced technical expertise on biocatalysis to promote application of these in small molecule manufacturing, which will strengthen our offering in APIs and CDMO segment. We have completed scheduled expansion at R1, including new R&D block, along with balancing downstream equipment. Our new capacity implement R2 is in the ramp-up phase with large-scale CDMO partners. New greenfield site at R3 is in design finalization phase. We expect expansion to happen in a phased manner. This site should further strengthen Laurus Bio capabilities in offering CDMO services in animal origin-free proteins, growth factors, apart from large-scale precision fermentation. We believe global opportunity in alternate food proteins is an exciting phase. Our focus is to have the right scale, cost, and functionality. This will drive our technology differentiation. Let me turn on to our FY 2024 outlook. While we continue to focus on operational excellence and evolving R&D platform, we anticipate FY 2024 to be a consolidation year of sales growth. As mentioned before, we are working on several new projects from big pharma. A meaningful contribution from these products likely to happen in the medium term. New capacities invested during FY 2023 is expected to get optimally utilized towards second half of this year. I will hand over this to Ravi to share some financial highlights. Thank you, Dr. Satya, warm welcome to all the participants for our FY 2023 and Q4 earning call. Total income from operations for the full year is at INR 6,041 crores against INR 4,936 crores with a growth of 32%. During the quarter, INR 1,381 crores registered as a revenue against INR 1,425 crores with a decline of 3% year-on-year. The gross margin from full year was moderately down to 54.1%. This is largely due to significant price fall in ARV portfolio and change in product mix. Our EBITDA for FY 2023 is at INR 1,594 crores with 26%, whereas for the Q1, 21% with INR 287 crores. For FY 2023, the business mix had positively contributed as margin-positive ARV business got materially offset by increase in CDMO/CMO business, but the negative operating leverage on new capacities commissioned and higher inflation impact led to the margin fall compared to the last year. We are working on several initiatives around productivity and cost improvement to manage its impact in FY 2024. We are using three points categories. One is on the raw material price improvements. Second is on the process improvements. Third is on the in-house manufacturing of the some of the intermediates for ARV. These three we expect, impact will be minimized in FY 2024. Our diluted EPS for FY 2023 is INR 14.6, with a decline of 5%. Our return on capital employed is at 23.1%, versus the 26.3%. We have been able to manage, due to better networking capital management, when compared to the March 2022 numbers. On the CapEx front, we are on in line with INR 2,000 crore guidance for the two years, FY 2023 and FY 2024. INR 990 crore was spent on the CapEx side in FY 2023. FY 2024, our majority of our CapEx is on synthesis and bio. Almost like INR 800 crore we are trying to invest into the synthesis business. The CapEx investment made in FY 2023 will start generating revenue from the second half of FY 2024. With this, I would request the moderator to open lines for the Q&A. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets when 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 Ravi Agarwal from Agarwal Investment. Please go ahead. Hello. Am I audible, sir? Yes. Yes. Go ahead. Go ahead. Yes, sir. Namaste. Sir, what type of growth you see India as a key supplier of API or intermediates when we consider energy crisis in Europe due to war situation or any other reason? Whether due to energy crisis in Europe, many plants are shut off for API, and it will be create an opportunity for company like Laurus in India? The energy crisis in Europe will definitely make cost of manufacturing higher. If you look at the opportunities for companies like Laurus Labs will be in intermediates and APIs, not in the large volume products like specialty chemicals and other performance chemicals. For that opportunity to be captured, people need to have capacities. If you look at Laurus Labs invested almost INR 1,000 crores in the last year to seize such kind of opportunities. If you go to companies who wanted to look for contract manufacturing, if some company says, "Please give me contract and I will put up capacities," and it will take 16-18 months to set up capacities. Laurus is well positioned to take such advantage, and we are seeing some opportunities like that, what you have mentioned, Ravi. Okay, sir. Sir, one more question. See, what type of competencies in CDMO we have when we compare our company with Lonza or Samsung Biologics or WuXi or Syngene? Because that is heard from Samsung Biologics that is they are opening the 5th plant for bio-manufacturing. What type of competency we have as we compare to other companies? We are not into recombinant or bio CMO right now. Our Laurus Bio is not into therapeutic proteins. Our Laurus Bio is into enzyme manufacturing, is into food protein manufacturing, not into therapeutic protein manufacturing as such. We are not offering recombinant jabs for therapeutic use as of now. Okay, sir. Sir, what type of businesses are included? I request you to please rejoin the queue. Okay, sir. Okay. Thank you, sir. Thank you. The next question is from the line of Madhav Marda from Fidelity International. Please go ahead. Good evening. Thank you so much for your time. I just wanted to understand a couple of things. Firstly, you've been mentioning about, you know, we're front ending, some costs, in because we're adding new capacity. Could you quantify broadly how much is the upfront cost, which is not giving revenue at this point? We can give you how much capacity is not utilized, but we will not give you how much cost we are absorbing. One standard principle what we followed since inception, the pre-operative cost of any capacity which is coming online until commercialization is expensed. Not even a single dollar is capitalized. Currently, for example, Q4, we have utilized our capacities between 55% and 60%. Lot of spare capacity is available right now for us to seize any opportunities. Okay. Our plants can, potentially run at 100% or is the peak utilization like 85%? How does it work in our industry? It's about 85%. Just the second question which I had was, if you could just talk about the opportunities that we're seeing from, like you mentioned just in the previous question about opportunities coming from Europe. We won the animal health contract which starts in second half. Is there any more such contracts which would potentially win in the next one year? Just wanted to understand your thought process before. We have several programs in phase II, phase III, but we don't know how many of those will advance into commercial. We have no control, and typically we don't get a contract for future supplies until the molecule moves into commercial phase. There are several programs we have, and good thing is we have capacities to capture those opportunities if they move into commercial phase. Understood. Okay. Thank you so much. Thank you. Thank you. The next question from the line of Nishant Shah from Emkay Global. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. Basically my question is there any one-off in the revenue? One of the large contracts we executed with pharma, we haven't considered any sales in FY 2024. Okay. Yeah. What was the quantum? Sorry? What was the quantum of that project? Quantum we can't. Can't give you a number. We are not disclosed yet. Yes, yes. Thank you. Okay, thanks. Another question is on the outlook. What is your outlook on the near term and the long term, and you are talking of the cost improvement and the technology improvement, ongoing projects and pipeline and the new product launches. Will you be able to maintain the 25% of CAGR growth that you are saying and any new addition of the geographies? Our growth will come from capturing more opportunities with existing partners. We are not anticipating growth coming from new geographies. Okay. Is there any line item in the revenues which have occurred in this year or in this quarter, but which may not be a part of our next year or the future revenues? Sorry, your voice is not very clear. No, is there any line item, future revenues captured in the current year? No. No. No. Nothing. Right. Yes. Okay. The last question is, if we are seeing the slowdown in the U.S. and there are news of our U.S. may go into a recession, what kind of a incremental impact can be seen on the company? Our generic sales in U.S. is not significant for us to get impacted. Okay. Thank you. Okay. That's all my side. Thank you. Thanks a lot. The next question is from the line of Harith Ahamed from Avendus Spark. Please go ahead. Good evening. Thanks for the opportunity. The 60% quarter-on-quarter growth that we've seen in the FDF business, trying to understand how much of that has come from ARV formulations versus the exports to U.S. and Europe. If you could share the ARV formulations number for the quarter that'll be helpful. Generally we, in the quarter four, we did INR 393 crores sales in formulations. Above that, ARVs is, I would say 60% is, ARVs, and rest is non-ARVs. Okay. Going forward for the overall ARV business, in the past, you had given guidance around INR 2,500 crores of revenues for the API plus the FDF, ARV combined. Are we maintaining that number for FY 2024 and beyond? Yes. We will definitely maintain that number in FY 2024 and beyond. Okay. In the presentation you mentioned that you've completed supplies under the last purchase order in December 2022. While, you know, Pfizer has talked about, you know, continuing, or have guided for a fairly large, you know, revenues from the product in calendar 2023 as well. Can we expect further orders under this partnership, you know, in future? We don't know. We have no knowledge on how things will move. Yeah. Okay. Last one with your permission. Sure. LSPL Unit 3 and LSPL Unit 4, you know, how should we think about the timelines for commissioning of those two capacities? LSPL Unit 2 will be for animal health, we're going to commercial portion in second half of FY 2024. LSPL Unit 4 is for agrochemical, we already have a pilot plant for registration batches. Commercial production will happen maybe by second half of FY 2025. Okay. Then, you know, we've had a couple of years of close to INR 1,000 crores of CapEx, and you're guiding for some the number in FY 2024. How should we think about CapEx beyond FY 2024? Will there be a reduction in the CapEx intensity in the business? I think we take another quarter to give a guidance on an FY 2025. We are working on that. Probably maybe lesser than what we have spent in the current year and the next year. It all depends on what opportunities will come for us. If opportunities are there, we are happy to invest. Two years back, we never thought we will invest INR 2,000 crores in CapEx. We are investing because there is a visibility for us what to make, how much to make, to whom to sell. Yeah. All right, sir. That's all from my side. Thanks for taking my questions. Thank you. Thank you. The next question is from the line of Bino Pathiparampil from InCred Capital. Please go ahead. Hi. Thanks for taking my question. Just couple of clarifications. When you say FY 2024 is a consolidation year, can we assume that it is like broadly a flat year for at the revenue level? I think you can think that way because we were saying last year, despite not having that large contract in FY 2024, we still maintain our growth slightly over FY 2023, is a big achievement. We are not giving any quantitative guidance. Even you assume it will be flattish, despite not having that large contract, we will still grow over previous year is a good achievement. Understood. The Q4 EBITDA margin level, is that a good base to work with? I'm not looking for any specific number for FY 2024, but, you know, generally is that a good reference point for us to work forward? Yeah. I think we will get back to you at appropriate time about how maybe our Q1 and Q2 results will give you some guidance which direction we are going in the margin. We can assure you our EBITDA margin will not go below 20%. Yeah, 21%. Actually, yeah, 20%. Yeah. Understood. Great. I see that you have adopted the new policy for tax. What would be your reported tax rates for FY 2024 onwards? 25.17%. We are moving to new regime. Okay. It will be 25%. Yeah. Okay, great. Thank you. I'll join back with you. Thank you. Thank you. The next question is from the line of Jeevan Patwa from Sahasrar Capital. Please go ahead. Yeah. Just one question I think is, this time formulation- Sorry. The line for you is a little muffled. Okay. I'm basically saying this quarter, formulation and API has picked up very well. CDMO is actually much below expectations. Is there any kind of deferment of shipment or anything? No, there's no deferment of shipment, Jeevan. We delivered what orders we were supposed to deliver in Q4, we delivered. Nothing was deferred. Okay. Okay. even if I look at the whole year, and if I just remove that one time, not one time, but the large product delivery, one-time delivery, then the CDMO sales year on year doesn't look any growth. CDMO, you can't have a flat, a straight line or a. It will be depending on what customer lists we are delivering. It will be little bit bumpy sales you can expect in CDMO. Not just for us, for any customer. Yeah. Sure, sure. Secondly, the gross margin has actually dipped below 50% this time. I'm asking this since last two, three quarters, I think. I'm still not able to understand, the gross margin trajectory has been down since last few quarters. A year it, there was large CDMO, the gross margins were almost 50%- 58%. CDMO percentage are same, but still gross margin actually came to almost 54% and 53%, and now it is below 50%. Which kind of gross margin you think we can assume actually going forward? Is it 50%-53% is a good, consistent, sustainable gross margin we can assume? See, the gross margin impact was mainly due to depressed pricing in ARV, APIs and formulation. Correct. As we implement some measures in process improvements, manufacturing cost improvements, purchase pricing improvements, these margins will improve. I'll not give a quantitative number, how much it'll improve, but definitely margins will improve. Okay, perfect, sir. The last question is on the formulation side, any guesstimate on, you know, how much will be our utilization on per billion tablet basis? How much will it be right now, and how much you think it will be at the end of the year? Currently, we are around 50% capacity utilization out of INR 10 billion. Okay. We expect that will go to 70% by end of FY 2024. Okay. Okay. Okay, sir. Thanks a lot. Thank you. Yes. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah. Am I audible? Yes, sir, you are audible. Sir, just on your guidance of FY 2024 remaining stable compared to FY 2023 in terms of the overall financial performance. Will that be spread across four quarters, and considering that fourth quarter FY 2023 we had INR 100 crore PAT, should one expect rebound in Q4 FY 2024 onwards or that will be more back-ended as the animal health contract picks up second half FY 2024? That's my first question. Tushar, actually, we don't want to give a guidance on the quarterly basis. Actually, on the annual basis, whatever Dr. Satya has indicated, that is based on annual. Okay. just secondly, on this formulation capacity, while we had good number of ANDAs filed, over past couple of years, but not seeing good, so great traction, at least on the U.S. generic side. This new non-ARV formulation, you know, where do we see the business prospects from? Is it more from ANDAs or is it more from the customer-specific contracts? Significant growth in formulations in non-ARV will come from contract manufacturing and also increased sales in Europe, increased sales in U.S. and Canada. Okay, thank you. That's it from me. Thanks. Thank you. Thank you. We have the next question from the line of Gaurav Singhal from Aspex Management Hong Kong Limited. Please go ahead. Yeah, hi. Thanks for taking my question. One is, can you share how many projects you have in phase three for the CDMO project or for the CDMO segment or any other color on phase three that you're working on? We are only giving the total number of active projects, over 60. We are not giving the detailed breakup of how many in phase I, phase II, phase III. Yeah. Okay. No, no worries. Secondly, on the slide that you have for FY 2024 outlook, you mentioned that one of the negative factors is lower prices for ARV, API and FDF. Are you suggesting that the prices in FY 2024 can be lower from Q4? Because my impression was that ARV, API prices, for example, already stabilized. Also on the FDF, we got this Global Fund contract, which where the price is kind of known. Maybe if you can share some thoughts on why you feel prices can be lower, you know, at the end of FY 2024? We don't expect the prices will be lower when compared to Q4 to Q1 FY 2024. We're not expecting that. We believe the ARV prices have bottomed out. Oh, okay. Yeah. I see. I I see. It's more fully ARV FY 2024 obviously. Got it. Got it. Got it. Just one last thing. On this Global Fund project for the ARV formulation, when do we expect to start the shipment and what can be the cadence of the ramp-up? Shipments we have started already. Yeah. Got it. sorry, just one more, if I may. For the large project, in CDMO, did we have any contribution of that in Q4, or did we have no contribution in Q4 for that? No. No. The large item what we delivered has no contribution in Q4. Got it. That's very helpful. Thank you. Thank you. Thank you. The next question is from the line of Bharat from Quest for Value Capital. Please go ahead. Hello. Hi, sir. This is Bharat from Quest Value. Hope you're doing good. In the presentation I see there is a new Greenfield Unit 9 in Hyderabad. May I know, sir, how much billion tablet capacity is that? That capacity we purchased land, but we haven't started construction of formulation facility in Hyderabad. Okay. Yeah, because, we have. The first facility will come up in that site will be sterile commercial manufacturing and then followed by oral solid manufacturing. Okay. Okay. Thank you. I think, in Vizag I think we have, I know, we have all the civil structures ready, and then, if we just add the lines, I think we could increase the capacity from 10 billion to 15 billion, I guess, right? You're absolutely right. That is the reason the new formulation capacity will come up in Hyderabad will be for sterile commercial manufacturing, not for oral solids. Okay. Yeah. Thank you. Thank you very much. Yeah. My second question is like this is more on the long term. I want to know your vision. Like five years down the line, may I know, like, how you see the product mix changing? May I know, how much could be the share of CDMO and bio together combined five years down the line? Very interesting question. Yeah. This year, which we might discuss, FY 2023, our CDMO revenue was 36%. Mm-hmm. CDMO and Bio in five years it should be 50% maybe. 50%. Okay. That's only a broad number. Yeah. Broad number. Yeah. Got it. Yeah. That comes to my next question. Like, we have many divisions now, which you see we have human health CDMO, we have animal health CDMO, we have agro CDMO, we have bio, we have generic FDF, we have ARV as well. I just want to know, like, do you think you have enough management bandwidth to manage all these divisions? Yes. In the CDMO, how we define in part of CDMO or not, we are selling any product where technology comes from partner and sell it to only one, that's CDMO for us. There is no technology risk, there is no market risk, there is no pricing risk because all those are predetermined. Our management bandwidth is only in the manufacturing space, not in the business development space or procurement space. That's easy business to handle for us. Okay. Okay. Yeah. We have enough management bandwidth at this juncture, and we have been reviewing on a periodical basis and where as and when necessary, we induct more people into the system. Okay. When you say that you want to access the 50% of share from CDMO and bio in five years from now, it means I understand that the management focus is more towards CDMO than generic FDF or- It's not focus. If you look at the investor presentation, what we posted, the revenues coming from non-ARV has gone up significantly. I get that. Yeah. Yeah. Yeah. Here in your question, there is an answer. When you say 50% to the CDMO and bio, the 50% is generics. It is not that we have an equal focus. Yeah. Yeah. Okay. Okay. Yeah. Thank you. Thank you Thank you very much. Yeah. That's it from my side. Thanks. Thank you. Thank you. The next question is from the line of Monish Shah from Antique Stock Broking. Please go ahead. Actually, my questions are answered. Thank you. Thank you. The next question is from the line of Neha Agarwal from SageOne Investment Managers. Please go ahead. Thank you very much for taking my question. Dr. Satya, you guided for FY 2024 revenue growth, and this the last days of FY 2023. Just want to understand, the growth guidance is also in terms of profitability or is more of top line growth that you are more comfortable with? We'll give you more guidance as we re-declare results in Q1 FY 2024 and Q2 FY 2024. We can't give you more granular digits right now. Sure. Not only looking at numbers here, but if you could just, suggest whether this is in terms of top line or bottom line. gave a guidance on the top line. Okay. Okay. Thank you. Another question from my side would be the CapEx that we did in the last two years, FY 2022, 2023, and then the plan that we have for 2024 all put together close to INR 2,000 crores-INR 3,000 crores. In how many years subsequently do you think we could achieve full utilization of those CapEx? I think the current capacities will be fully utilized by FY 2025. I'm sure FY 2025 we'll put more CapEx to increase our capacity. If you don't increase capacity, the growth opportunities are also limited. We need to continue to invest. If you look at the added 30% API capacity in the last 24 months, and we added 50% more capacity in formulation in the last 24 months. That's a significant improvement in capacity. Yeah. You're saying the capacity put up so far, at least for that you are expecting till 2025? Yes. Just one last question, if I may, from my side. sir, out of the 60-plus active projects that we have currently in the synthesis side, any new projects that we are expecting to go commercial in FY 2024? Just from the expectations side. I'm sorry, we can't give you those kind of details. See, we've broadly mentioned we are putting capacities, what to make, how much to make, whom to sell. At least there is clarity. Yeah. Sure. Yeah. Thank you. Thank Thank you. Thank you. Thank you. The next question is from the line of Arun from Nuvama. Please go ahead. Hi, sir. My question related to two parts. One is that your CDMO business. I mean your CDMO page in your PPT, which you have released. If you look at your CDMO business is doing INR 200 crore on an average, if you exclude whatever the one-off number you have. Just trying to understand that if you look at even five quarter, your CDMO business remain in same level, INR 200 crore per quarter, right? What is the, I mean, say, guidance you are giving for this business? Because it has a very high base, and to matching that high base it will be very difficult even to achieve the same kind of number in FY 2025. Am I correct, or you have some different view? I can't comment on your views. Your views, we appreciate. What we feel since we are investing to capture opportunity CDMO, we see opportunities to grow. If we remain at INR 200 crores-INR 250 crores per quarter, and there is no need for us to invest. You need to look at how the on a year-on-year it has grown, right? It was INR 500 crore a couple of years back. It moved from INR 500 crore to INR 900 crore. INR 900 crore it took you only one, I can say one point of view is we always say that one one-off, the kind of mileage we get from the execution of the contract will not give any credit. See, as we are indicating, repeatedly for last four to six quarters, we are bullish on CDMO. We're still bullish on CDMO. We can't give more specifics to this, maybe over a period of time you can see the numbers. Sir, same, you said that we are investing and therefore we are very confident that, this. What I can read from your words, right? We are investing. If the number will be remain INR 200 crore, then we should not have been investing. If you look at your investment in last two years, you have almost invested like INR 3,000 crores, INR 2,500 crores. I presume that most of the business has gone to CDMO. If I do any kind of calculation, and if you are utilizing in 50%-60%, it is not even matching your one-time asset to turnover. If you, if I exclude your, one-off number. Anyway, we can discuss it offline if you, if you want to add. I just give a glance, and then we can discuss offline any point of time, Arun. If you look at the INR 2,000 crore investment, we never said it was invested for CDMO business. What we are saying is we are going to invest INR 800 crore into the CDMO business in FY 2024, and those kind of results you will see in the next week, FY 2025 onwards. We can discuss further on this if you have any clarification, Arun, offline. Okay. Thank you. Second question is related to guidance, sir. If you look at your five-quarter guidance, right? Just two, three quarters, you tone down your guidance, right? You will not be able to achieve $1 billion. I can understand that there are a lot of uncertainty in business, right? This is humble suggestion that when you guide something, right, you should have some kind of margin of safety for that, right? If you look at this year, whatever I can inform, infer from your words, you are saying that in FY 2024 you will be probably a flat, right? If you do any kind of calculation, even you said that your FDF business, which is that fixed, I mean to say your generic business in U.S. will not see any kind of competitive pressure. You answered for certain very specific question, which was that recession related. I can understand that. Recession may or may not. In India or anywhere in the world, no generic company can guide that our business will not see any kind of pricing pressure. You have done extremely well in last 12 to 15 months. This is my humble suggestion that when you're speaking with a lot of investors, at least 1,000 people are listening to you, at least have some kind of margin of safety when we speak, as far as the guidance is concerned. This is my humble suggestion, sir. Arun, thanks for your suggestion. What I mentioned, our formulation revenue coming from U.S. is not that large to get impacted. That's the comment I made. I think Ravi want to make some comment. Yeah. Arun, here, we never gave any quantitative guidance. See, we gave in billion dollar. Of course, our investor friends also make an, some kind of a provocative approach in the sense, in a not a negative way, positive way. What you will do? How you will do? In one of the point, actually, you know, we said billion dollar. In the, in the next quarter, when we came to know that the billion dollar is not going to happen, we gave a guidance, revised guidance, and we are on par with our revised guidance. In our investor presentation also, we mentioned that. We are cognizant of what we speak. It's not that we know we are aware, well aware, many people are watching us, and we also aware that how the performance has been improved for over several quarters, not one quarter or two quarters. We also know that how we have been build the organization is. In a 16-year time, we have invested INR 5,500 crores into CapEx. We have 6,500 families have been working for us. We are very cognizant of it. We also know the margin of safety. Thank you. Thanks a lot, sir. Thank you. The next question is from the line of Saurabh Kapadia from Sundaram Mutual Fund. Please go ahead. Thank you for the opportunity. What were the one-offs, in Q4 that impacted our EBITDA margins? There's nothing in Q4. No one-off. How can we look at the, you know, margins for 2024? Like you mentioned about the top line, to be probably maintained at 2023 level. Any color on margins, how we should look at the margins, you know, in 2024? as we mentioned, I think you will get more clarity and color when we give results for Q1 and Q2 for 2024. I think we will leave at that stage. Okay. Okay, yeah. Thank you. Thank you. Thank you. The next question is from the line of Yasser Lakdawala from M3 Investment Private Limited. Please go ahead. Good evening, Dr. Chava and team. You know, I had a brief question on, you know, on the non-ARV API side. Probably the oncology API business is a low volume but high value API business. What about the other APIs there? What is our right to win in the other APIs? Are they large volume products? Do we have some cost advantage there, to give some, you know, qualitative insight there Just tell from that, are these older or newer molecules? You know, basically things that have lost IP protection in the near, in the recent past. If you give some color on that'd be very helpful. Sure. If you slice the API revenues of INR 2,600 crores, we mentioned INR 1,530 crores coming from ARV APIs. INR 318 crores is coming from oncology. About INR 780 crores is coming from non-ARV, non-onco. INR 770 crores, half of that revenue coming from contract manufacturing of generic APIs to generic customers. Okay. We are offering manufacturing and service to other generic companies, where they include our site into their DMF. Technology is theirs, DMF is theirs, and we make with a different margin. At least it's a good business because we know the raw material cost. Our partner also know the raw material cost. We are not changing process. Most likely we are not changing the pack sizes also. We create capacities for them, so we are giving our manufacturing facility, kind of a total manufacturing for them. That's about half of the business. Rest is again, medium to large volume products. We are not doing small volume products there. Most of those products are well-established generic molecules. We are not trying to get into day 181 or P4 markets there. They're well-established markets. Okay. Thank you, Dr. Chava. You know, also on the formulation side, I saw that, you know, we have a few sort of Para IV Filings and FTFs. Just a sort of question and just to understand this better, you know, we have a CDMO business which is dealing with, you know, big pharma and, you know, biotech. On the one side, you know, we are doing IP protected work for them, and on the other side, we are, you know, having these Para IV Filings and FTF. Do you feel that you can run these two businesses independently? Is there any sort of case of conflict of interest? Or, you know, if you could just help us understand how this... You know, what is the thought process here, and how do you see your customers reacting to this? That'll be helpful. Thank you. No, that is a very pertinent question you have asked. It all depends on the customer and how we are approaching customer in IP. Typically for the class of compounds we work, we don't want to work in generics. More often right now, we are not working on any P4 opportunities, with the partners which we are working. We don't want to have a conflicting business. We are also very clear on our approach right now to the CDMO business. Sure. Yeah, last question here. You know, we've had this one-off opportunity during COVID. You know, just to understand, from a company level margins, how do you see or, you know, if you could give us some color on sort of the EBITDA level profitability of our API and FDF business as compared to CDMO. Are they higher or lower than, you know, what would be our normalized margin? We gave a qualitative guidance that in the order of increasing profitability, APIs, formulations and CDMO. That's the only guidance we gave, and we stick to that. We don't want to give any absolute numbers there. No worries. No worries. Thanks, thanks a lot, Dr. Chava. Thank you. Thank you. Thank you. The next question is from the line of Gaurav Singhal from Aspex Management Hong Kong Limited. Please go ahead. Hi. Thank you for taking my question again. Just one follow-up. On the CDMO side, can you share some thoughts on the competitive landscape and the supply of capacity that is coming up in India, and also specifically for Laurus Labs? Some of the advantages I can see obviously is you're working on 60 active projects. As they get commercialized, you can be the vendor of choice, and you also completed this large project on time. Are there any other advantages that can help us stand versus the competition when we look at the new supply for CDMO in India? The Indian CDMO companies are well-positioned to capture the opportunity, because of supplier diversification initiatives by big pharma. I think it is a good opportunity not just for Laurus, there are many other CDMO companies will do very well. That's what we feel. The advantages are the ability to create capacities, the ability to recruit people to support the capacities. The current global scenario is also helping India to get more projects. I'll put it that way. All right. Thank you. Thank you. The next question is from the line of Ratish Varier from Sundaram Mutual Fund. Please go ahead. Yeah. Thanks for the opportunity, sir. Congrats. You know, over the last two years, our execution, et cetera, has been excellent. I would like to place that on board that it has been an excellent execution. Just one clarity only I wanted. One of my colleague also asked this on margins. No guidance, but, you know, if you see in the previous, five, six quarters because of one-off opportunities or specific contracts, et cetera, we had certain margins, right? I just wanted to understand as you move forward over the next, one or two years, are those margins aspirational or, you know, those are one-offs which went by and it will go by, you know, what current Q4 exit run rate is there. From that, slowly improvement is what we have to see. Just wanted some colors around this. You can give us some thoughts there. Thank you. When the business was very prosperous, even before this large contract, we were inching towards 30% to EBITDA even before this large contract from global pharma company. I think we'll put our efforts to improve our margins. The change in business mix and improvement in margins of ARV business and our dependence on ARV business goes down, our margin profile should also increase. If If you look at our FY 2018 to FY 2023, the numbers, we grew our ARV business to INR 500 crores, but non-ARV business to INR 4,000 crores. The other challenge what we're having is since we are adding lot of capacity, there's lot of deleverage is happening. As we move ahead to deleverage, leverage of our capacities and teams, I think our margins will improve. Yeah. Okay. Just one more follow-up, sir. regarding, you know, the revenue guidance. I'm not asking for any number. Here when we are saying consolidation, et cetera, this is we are saying based on still we are left to sign certain contracts as you're saying they're in pipeline. because of that, we are not that confident from a guidance perspective, or we want to be more cautious this time? Thanks. We want to be more cautious. Okay, I understand that. Thank you so much. Thank you. Ladies and gentlemen, we will take the last question from the line of Madhav Marda from Fidelity International. Please go ahead. No, I just had one last question. In the PPT in the beginning, you had mentioned about, you know, want to invest up to 10% of profits on disruptive technologies. Has it already started, in the previous quarters, or this is something we could be starting FY 2024 onwards? When we mentioned disruptive technologies, the investment we made in ImmunoACT is part of that. We are evaluating few more opportunities. We are also very conscious not to invest more than 10% of our profits in such kind of initiatives. We did one. We are evaluating one more. Probably, when it is materialized, we'll let you know. Sir, has this already, this already happened for FY 2023? I'm assuming it's already, like, happened in the last fiscal. This will happen in FY 2024. The new investment will happen in 2024, not in FY 2023. Our investment in ImmunoACT happened in FY 2022 or 2023. Sorry, FY 2022. FY 2023 we haven't done any such investments. We evaluated, but we were moving forward, and we will let you know when we will do something there. This is 10% of PBT or EBITDA? What does profits mean in that? It is a very, very qualitative term. It's 10% of our profits. Yeah, PAT. Of PAT, okay. Yeah. Thank you. Thank you. Thank you. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Thank you all, stakeholders for your engaging discussions. Whatever steps we do, whatever investment we do, whatever initiatives we do is for the benefit of all the stakeholders, and we wish you all the best. Yeah. Thank you. Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us. You may now disconnect your lines.