...Ladies and gentlemen, good day, and welcome to Laurus Labs Limited Q2 FY 2025 earnings conference call, hosted by Antique Stock Broking. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, 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. Yeah. Thank you, Dale. Good evening, everyone, and welcome to Laurus Labs Q2 and H1 FY 2025 results conference call. Today, we have with us Dr. Satyan arayana Chava, Founder and CEO, Mr. V. Ravikumar, Executive Director and CFO, and Vivek from the IR team. On behalf of Antique Stock Broking, I would like to thank the Laurus management for giving us the opportunity to host this call. I would now like to hand the call over to Dr. Satya for his opening remarks. Thank you, and over to you, sir. Thank you, Monish, for your introduction. We welcome you all to the Q2 FY 2025 and first half of FY 2024 results conference call. We are pleased to see sustained demand in our CDMO services, supported by operational excellence initiatives and expanding platform capabilities at both development and manufacturing scale. Our pipeline momentum across business network has remained healthy, and we are demonstrating steady progress in application of specialized technologies like continuous flow, biocatalysis across multiple projects. Our ambitious and dedicated teams are working diligently to expand portfolio offering and advance pipeline projects with a goal to solve our customer complex needs and deliver long-term stakeholder value. We recently announced the opening of the new small molecule R&D center at IKP, Hyderabad, which significantly elevates our one-stop development and manufacturing service capability, enabling innovators to accelerate their clinical and commercial phase projects using cutting-edge technology. I would say the new center is seeing good interest from our several existing biopharma customers for early-stage process development work, and we believe it will play an important role in driving our future growth. As communicated earlier, Laurus is on track to evolve into a well-respected and diversified CDMO company, meeting complex needs of our customers, and we are reinforcing it by executing on our long-term investment strategy in advancing both our development expertise and building integrated large-scale manufacturing capabilities. Moving on to our financial results, our Q2 results demonstrated continued resilience in financial health, reflecting robust business quality despite pricing pressure in generic APIs. For the quarter, we delivered a revenue of INR 1,224 crore. The growth is flat over last year, although there is a strong growth in CDMO division, which was substantially offset by lower uptake in ARV and oncology APIs. Gross margins were very healthy and maintained at 54%, while EBITDA margins remained subdued at 15%. This is due to lower asset utilization and dilution from growth project initiatives in cell and gene therapy, as well as both human health and crop sciences. Our performance is well on track to deliver full year growth outlook. This will be driven by facility ramp-up and scheduled CDMO project deliveries in the second half of this financial year. To begin, I would like to share key updates on various business segments. In CDMO, we continued its operational and commercial improvements and recorded a sale of INR 299 crore. On H1 basis, the division recorded 8% growth. The soft growth is on expected lines, driven by a significant resource allocation towards delivering multiple high-value complex programs at various clinical phases. If you look at CDMO business environment, the outlook within small molecule service industry is positive, and in specific, there is good demand for specialized expertise with rising number of complex compounds in the clinical phases. Against the industry backdrop, we expect healthy growth in FY 2025, supported by scheduled project deliveries for late-phase clinical programs in Q4. As highlighted in my initial remark, we have commenced operations at our new small molecule R&D center in October 2024. The facility will leverage advanced capabilities like flow chemistry, biocatalysis, high-potent chemistry. This will enable us to secure early-stage projects to widen the project funnel and meet the expanded global partner needs. We are working on over 90 active projects in total, over 70 in human health and about 20 in the animal health and crop production. In the generic API, revenues from this division during Q2 reported a decline of 11%, and we achieved 557 crore sales. This was mainly due to lower demand in oncology portfolio and temporary impact from a planned facility shutdown for modifications, while other APIs reported in-line sales. For H1, the overall growth was very flattish. ARV APIs reported revenues of INR 368 crore. This was lower compared to last quarter, as we had to undertake certain modifications in the manufacturing facilities, which created capacity shortage for a few products, affecting dispatches in the Q2. We expect operation to resume from this week onwards. Having said that, Laurus will fulfill all confirmed orders and contract obligations. We don't expect this will have any impact for the overall financial year. The current order book for our product basket looks encouraging, and we continue to maintain a leading share in the first-line HIV treatment. Oncology APIs sales have declined, and we reported Q2 sales of INR 51 crore. In the other API segment, which includes various therapies like cardiovascular, diabetes, and asthma, we have reported sales of INR 138 crore. For the year, it is only 3% growth. We're actively working with few customers to expand our CMO engagements as part of our strategic growth initiatives, and we remain committed to long-term growth with clear focus on cost leadership and select high-value APIs. During H1, we filed four DMFs. Out of these, three are in non-ARV category. With this, total number of DMFs files so far is 87. Our formulation division reported an overall revenues of INR 328 crore for Q2. Our H1 revenues decreased marginally by 2%. Performance was subdued due to lower volume uptake in ARV units, offsetting good growth in the developed market portfolio. We expect to see sustained benefit of few recent ANDA approvals in coming quarters. In addition, we also increased BD efforts to service new market opportunities. We continue to focus on strengthening portfolio offerings and increasing market share. Similarly, we have total of 40 ANDAs filed to date. Of these, we have a total of 21 final approvals and 14 tentative approvals so far. I'm also pleased to report that our collaboration with our partner, Krka, is progressing smoothly, and the capacity expansion remains on track to meet their strategic capacity needs. We have already initiated tech transfer for multiple products under this, arrangement, and in the medium term, the focus will continue on delivering synergies and enhancing product portfolio, and also entering into India market through the joint venture. On R&D front, our overall spending to sales for the first half of this financial year was at 5.4%, which was increased by 25% year-on-year. The higher R&D spends is in line to enhance our pipeline, which includes additional spend towards fermentation, biocatalysis, and gene therapy programs. We continue to invest in portfolio with product-specific approach based on complexity and scale economies. We have a total of sixty-two products in the R&D pipeline, either under review R&D development, having a significant addressable market size. We also expanded our capabilities at our fermentation site, R2, by adding a new pilot plant. This enhancement will not only allow us to further optimize R2 capacity, but also helps us to debottleneck and optimize R1 capacity for our renewed projects. The plan to build larger fermentation capacity is on track to capitalize on GMP manufacturing opportunities. In the H1, the company underwent close to seventy-six quality audits by multiple regulatory agencies and several customers. The company has successfully passed audit inspections without any critical findings. During the quarter two, we have concluded successful US FDA inspection of API manufacturing facility in Hyderabad without any observations. Together, we have made significant progress across building diverse portfolio, with an exciting product pipeline. As a company, we are committed to ensuring our actions remain aligned with our strategy, and I'm confident that we are all well-positioned to deliver value to stakeholders in the coming years. With that, I would like to hand it over to Ravi to share some financial highlights. Thank you. Thank you, Dr. Satya. Very warm welcome to everyone on our quarter two and H1 FY 2025 earnings call. Total income from operations for H1 are at INR 2,419 crore, against INR 2,406 crore previous year. For the quarter, we have reported a revenue of INR 1,224 crore, which is almost similar. Performance is largely on expected lines and is slated to improve in H2, driven by order book and expected project deliveries. Gross margin maintained at healthy level for Q2, at 55%, and for H1, it is at 55%, same, 55%. This is partly by a better product mix and also process improvements done in some of the key large volume APIs. ...Our EBITDA for quarter two stands at INR 182 crore and margin at around 15%. For H1, 353 crore with margin of around 15%. The margin was suppressed due to continued operational deleverage. Our profit after tax for H1 is INR 33 crore. Our ROCE was around 5.6%. This is because of lower profitability and the CapEx and continued CapEx investment for the growth projects. On the CapEx front, we invested close to INR 137 crore for the quarter and INR 262 crore for first half. Our net debt stood at INR 2,679 crore, and debt to EBITDA is around 3.4. This we expect to improve based on H2 performance, this ratio. We will continue to prioritize investment into higher value business segments to drive sustainable medium to long-term growth. The board of directors recommended dividend of, interim dividend of INR 0.40 per share. You can refer further details our IR presentation. With this, I would request the moderator to open the lines for Q&A. Thank you. Thank you. 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 while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah, thanks for the opportunity. Am I audible? Yeah, yeah, Tushar, you are audible. Yes, sir. Sir, with respect to this onco API, given that this is to do with the increased competition, so, how do we, you know, how are we thinking to cope up, almost, you know, INR 50 crore quarterly, you know, sales dip, which has happened in the onco API business? Tushar, we don't have, competition severe in this. The lower sales is only based on the delivery schedules to our partners. Overall year, we don't see any challenge in achieving, growth over the last year. That is of the onco portfolio, I think, today? Yeah. Yeah. Got it. On the FDF side also, we have not seen, you know, major accruals or maybe even in this quarter, we've seen only one ANDA accruals officially. So how are we able to, you know, sort of grow in the FDF segment, going at least for next, say, twelve or fifteen months? For the ANDAs which were approved in the last two, three quarters, we are only building up stocks to garner the market share. That is the reason we are very confident to increase our sales in the non-technical market. Understood. And just lastly, if you could just refresh in terms of the guidance which we are talking for FY 2025, is that the sales will be stable as compared to FY 2024, or, you know, how to read it? See, in the FY 2024, 2025, if you compare, the biggest growth will come in the synthesis CDMO division. See, in the year FY 2024, CDMO did INR 922 crore. If you look at in H1 this year, we already done INR 553 crore. And we expect the number will go up significantly in the H2. So that's where we have been investing in the last two years. Our efforts towards securing customers, projects, and execution is going smoothly. From the beginning of this year, we were clear in our message to our all stakeholders, the H1 is going to be softer and whereas H2 is going to go as per our expectations. And we, we currently, we believe we are on track to deliver what we committed for growth in H2. All right, sir. Thank you. Thank you. Thank you. The next question is from the line of Jeevan Patwa from Sahasrar Capital. Please go ahead. Yes, sir. So first question is obviously, so we last time said that for the full year, we will achieve 25% kind of EBITDA margin. So first half, we are at 15% EBITDA margin. So do you think second half we'll be able to compensate for this? Given we... If you remember well, we committed to achieve around 20% EBITDA about the entire financial year. Yeah. Maybe you're referring until we achieve 25%, in the H2 will not be averaging 20%. So we are committed to show, say, 20% EBITDA for the entire financial year. Okay. And secondly, the, so this operating deleverage is actually haunting us since last few quarters now. So I would say almost, eight, ten, twelve quarters now. So by when you actually think that this operating deleverage will start actually being the reverse, right, so operating leverage will start kicking? So this has been haunting since almost twelve quarters. You are absolutely right. Seeing that operating deleverage has, you know, the EBITDA, so gross margin has been good this time because of the synthesis contribution. But again, we are into 15% EBITDA margin because of operating deleverage. So how long we are going to have this kind of operating deleverage still? ... See, in this, this operating deleverage came because we only planned investments into new areas. We only planned CapEx to meet the future demand. I think this operational deleverage is not surprising, not unexpected, and going back to your question, how long this will continue, maybe we are at the end of the deleverage. If you ask me when we will leverage, maybe we have to wait few quarters, but we are end of the deleverage right now. Yeah. So basically, I understand there are, you know, some large deliveries in the maybe Q4 of the CDMO part and all. But again, Q1 next year, first half is again going to be the similar because these are lumpy deliveries, right? Or do you think that will continue, you know, that will keep consistently it will we will have the CDMO business growing even for the next year and next half and year, so? No, it's a very interesting question, Param, you are asking, but as we mentioned, we are not giving guidance. But we'll give you more clarity as we go towards the end of Q4. Maybe Q4 commentary will give you how the forecast looks like Q1 FY 2026. Yeah. Okay. Because typically it is like Q4, we have, you know, I think the large deliveries and all, but again, the question comes whether H1 next year going to be again soft, so I think- No, we'll definitely answer your question closer to each quarter. We are not giving any guidance right now. Yeah. And the CMO contracts on the formulation side, have we started those contracts where we had the tertiary, you know, packaging and everything also? So, have those contracts started in this quarter, Q3? No, we will start Q1 FY 2026. We are investing more into manufacturing lines and packaging lines. The CMO for the integrated generic contract manufacturing, the results will come in Q1 FY 2026 Okay. So the formulation sale will still be in the similar line, so that will pick up only in next year. That's what you're saying, right? Our ARV sales will pick up formulations. Our non-ARV sales in North America will also pick up. When I said Q1 FY 2026, when you asked a specific question about the contract manufacturing. Yes. That expanded capacity will come in only in Q1 FY 2026. Correct. But this sales, so there's a meaningful pickup, I would say, because North American sales, I think. I don't know how much it will actually add. So I would say meaningful will happen only after we have this CMO contract, you know, starting. It is a combination of both. Our growth in FDF will come from our own sales in North America and contract manufacturing in Europe. It is a combination of both, not only one. Okay. Okay. Perfect, sir. Thanks a lot, sir. Thank you, sir. Thank you. The next question is from the line of Shrimant from MLP. Please go ahead. Yeah, hi. Thanks for the opportunity. Just one question on the debt. Like, debt has increased to INR 2,700 crore now, and looking at first half, operating cash flow is negligible. We are definitely looking to improve the debt-to-EBITDA ratio, but, in terms of absolute amount of debt, I mean, are you looking for some kind of reduction, or it can increase further? As we indicated last time, we'll be in the similar range. It will be below three thousand. Okay, and I believe we also have aggressive CapEx plan, right? I mean, around INR 2,000 crore. Yeah. Of course, CapEx plan is on. Okay, and that can be funded from internal accruals? Uh- Or some kind of funding. You see, if you look at our depreciation itself is INR 400 crore, right, on an annual basis. Right. Yeah, but, I mean, operating cash flow has been quite depressed, so that's why- Yeah. I'm wondering how Operating cash flow also will be support. Okay, so basically, internal accruals will be sufficient for the CapEx which we have. Yeah. With the CapEx plan which we have. Okay, got it. Thank you. Thank you. The next question is from the line of Madhav from Fidelity. Please go ahead. I had a couple of questions. The first one was, in the presentation, you have mentioned that, CDMO performance was soft due to long manufacturing time cycles. Could you explain what that means exactly? And, typically for these complex projects which you do, how long are these manufacturing, cycles, if you could help us understand? When we mentioned the complex and long manufacturing lead time, some of the projects were doing anywhere between 10-20 chemical steps, linear. So we need. See, these are not at commercial, so we cannot do on a regular manufacturing. So we have to be very careful in executing these batches. And sometimes our partners also will help us in scaling it up. What we meant long lead times is, executing those complex multi-step synthesis is taking a long time. So, when we mentioned the early financial year, the deliveries will happen in Q4. Some of the high-value projects, we know that much long lead time is needed, yeah, to procure raw material and execute those complex multi-step synthesis projects. ... So in a way, for the quarter four delivery, which we are planning, in some sense production is already happening in batches at our production site, even as of right now, and then all of this gets sold in quarter four. Something like that? Is that how we should think? No, for some projects, we started production in the month of February itself. Sale for that will be booked in quarter four, so like after one year? Yeah, yeah. No, no. February, we started February, March of, calendar year, and we are going to bill in January, February next year. Yeah, that's what, that's what I'm saying. So it took. It's almost like a one-year cycle. One year. to complete the building. Yeah, yeah. So as Ravi mentioned, so that means you can't do ten batches at a time, like a regular production. So you consume capacity, but utilization is in teens. And but you have inventory for a year, mostly it is paid inventory. Mm-hmm. So these are the kind of leverage deleverage is happening in the system right now. But this is what we expected. This is not surprising. When you're handling such complex projects, you can't deliver in one month from PO, so we need some time. So one way it is good. So we're handling complex projects, that means it's good for the organization. We are not doing a very simple chemistry. No, I think it's positive. I mean, at least it clarifies why we are going through this period of investment, right? That we're kind of doing these long lead time projects, so at least explain some of the financials which you are reporting. Okay, got it. And the second question I had was on the margins. Did you mention 20% for the full year effect 25%, is what we kind of expect? Yeah, yeah. That's right. No, 20%, we are not saying 25. 20% for full year effect? That's what Doctor indicated before. He's clarified on that. Got it. Which means second half you expect it to be significantly better, right? Because we're at 14-15% in first half. No, Madhav, as you have seen, our margins are healthy. If you do higher sales, I think most of the gross margin will flow into EBITDA, isn't it? No, no, I understand. I was just trying to clarify. Okay, understood. Thank you so much. Thank you. Thank you, Madhav. Yeah. Thank you. The next question is on the line of Bharat Kumar from Quest for Value. Please go ahead. Yeah. Hi, sir. In this presentation, it is mentioned that there are several breakthrough molecules in pipeline for CDMO. Can you please throw some light on these molecules, like number of breakthrough molecules, what phase they are in? Are they in mid-phase or not? Actually, our intention is not to give any more details on the clinical phase or therapy category of those projects. I think until those molecules goes into commercial phase, which everybody can monitor from the exports. So until such time, we don't want to give more clarity on that. Mm-hmm. Okay. Yeah, good enough. Yeah. And, may I know, what is your opinion on Bios ecure Act? I know that in short term there would not be much material impact, but do you see any early positive signs like increase in RFQs or increase in pilot projects? And more importantly, how your customers are seeing it. Are they diversifying away from China? So I can give our perspective, but I can't give you the overall industry perspective. What we have seen, there is a lot of customer interest in visiting, engaging with us on the capability understanding, from the large volume projects. For early stage, preclinical and phase I, we haven't seen much rush. So there were no increased flow of inquiries for preclinical and phase I. But there are discussions for phase II, III molecules, where they want to add a new vendor. Many customers are talking. Existing customers are increasing their pipeline towards us. That's the positive, what we are seeing. Mm-hmm. Yeah, and I see that this FDF revenue is very low in the last two quarters. With the lower offtake in ARV FDF, may I know, the reason for this, is there any slowdown in the offtake from KRKA and Global Fund? No, it's quite normal. Maybe we have more deliveries planned in Q3, Q4, but nothing unusual. Yeah. As I mentioned in my opening remarks, one of the block went for maintenance and modifications, EHS modifications. So some delay in deliveries in Q2, but we have enough capacity to service the existing orders. Nothing unusual is happening in ARV, both APIs or formulations. Okay. Thank you. And my last question is to Ravi. Ravi, sir, you guided that net debt-to-EBITDA would be around 2.5 by end of this year. Do you still maintain the same guidance? Yeah, today we are at INR 2,600, so maybe in that range. I can't say INR 2,500, but in that range we'll be there, but actually, as I said a little while back, so we will not reach, breach the INR 3,000 crore range. I mean, I'm talking about the net debt to EBITDA. So you said that the net debt to EBITDA- Net Debt-to-EBITDA, I think, INR 2,500 crore to INR 3,000 crore. What number? Two point five, you said. Yeah. Around that number. Yeah. Net debt-to-EBITDA, we not commented. Okay. Yeah, thank you. Okay, cool. I know you will calculate if I tell that EBITDA also you can calculate that. So I- Yeah. Thank you. Thank you very much. Okay. Thank you. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. ... Yeah, good evening, sir. I hope I'm audible. You are audible, Mr. Aditya. Yeah. Sir, Gilead has issued voluntary licenses for manufacturing of lenacapavir. We saw one huge transition from, you know, to TLD a few years ago. We might possibly see another huge transition in the coming year or so, and you are not one of the licensees of lenacapavir. Do you see another disruption in the ARV markets in the offing in the coming year or two because of this? The lenacapavir currently, it is approved as a PrEP. It is not approved as a treatment yet. So typically, the delta between approval in Europe, U.S. versus bringing that regimen to access markets is three years. So no therapy regimen disruptions will happen in the next five years. Will lenacapavir disrupt, and we will be left behind? We don't think so. If you look at the current licensees, some of them have API capabilities, some of them have no API capabilities, some of them have no ARV API experience. So at some point of time, we either will get license from Gilead or we will get sub-license from these manufacturers to make their API. So we are still very hopeful in that front. No, I get the point that you might be there for the APIs, but for being able to supply the finished injectable formulation, you may not be there unless you have a license. And if the license has been issued and, you know, this is already a marketed brand in the regulated markets, with comprehensive trial data available, do you still think that it will take as much time? I would have thought generally issuance of licenses are done only when, you know, market formation is on the horizon. We are pursuing our efforts. So today, we don't have a sterile manufacturing facility, and we can't convince anyone to give a license without having manufacturing capabilities. That's the one. So as and when we have sterile manufacturing capabilities, then we'll approach them, because they know that we are a strong player in this ARV space. When we have capabilities, we'll approach them again, and then there is time for us to do this. Nobody has an API. It is still, everybody has to develop. So it is very early stage. There were instances the number of licenses were increased, closer to the market formation. So we are pursuing that. Sure. And on GMP one, would Laurus be involved in any way in the future? Or is it that it, that being a pesticide, you may not be participating there? I'll not comment on that right now. Are you attempting to develop it in-house? As I mentioned, I will refrain from commenting on that right now. Yeah. Okay, sir. Just a final one: What should we consider, you know, as sustainable working capital in days terms for Laurus? I understand currently you're going through a phase where, you know, you're taking exhibit batches for your CDMO products, and that is not sustainable, but what should be a sustainable number? Right now, it can, yeah, you, as you rightly, your question has an answer. H1, actually, we have a higher number as an NWC, but March, definitely it will come down. It all depends on the further, in the next few months' time, what kind of, orders we're gonna, we are going to have, and then what kind of revenue we are going to be having. But definitely it will reduce than the current current number. Sure. Thank you, sir. I'll get back in the queue for more if it's required. Thanks for taking my questions. Thank you. The next question is from the line of Keshav Sriramamurthy from Guardian Capital. Please go ahead. Thank you for taking my question. So I have a couple of questions here. What would be the revenue guidance you would give for the company as a whole for the next year, right? And what would be the revenue guidance you would give for the individual segments? This is my first question. And my second question is regarding the API segment. Like, as we have seen a decline in the overall sales, right, what would be the major reason for this? Was this a drop in volumes, or are we seeing a drop in the pricing, price for our API products as well? I think, going back to your first question, Keshav, barring the seasonality of business for the previous quarters, we are not giving any quantitative guidance. We're only giving very qualitative. So I think we expect to deliver better results in the H2 and also better in the next financial year. We are only giving qualitative. Going back to the second question on APIs. API sales coming down because of less API deliveries in ARV segment and also less sales in the onco segment. And by the end of Q2, Q3, Q4, I think Oncology sales will go back to growth when compared to last year, and the ARV sales will be flattish. We don't expect ARV sales will grow. It will be very flattish by the end of the Q4. And we are developing some portfolio products to grow in API segment. We are not defocusing our efforts gaining market share or putting new products in the generic space. We have almost about 50-60 products in the pipeline in various stages of development. Right now, we haven't seen good filings. We have done only four DMFs in the last six months, out of those, three non-ARV. So most of the DMFs what we are developing are in the non-ARV segment. So we expect growth will also come from generic APIs, and also maybe integrated offering of doing formulations to our partners. So our generic segment will also grow, but may not be as fast as synthesis, because the generic itself has a long large base right now, whereas synthesis has a low base. The percentage-wise, you will see more growth in synthesis, but, quantum-wise, generics will also grow, beginning next year. All right. Thank you, sir. Thank you, Keshav. Thank you. The next question is from the line of Foram Parekh from BOB Capital. Please go ahead. Thank you for the opportunity. My first question is, our EBITDA margin for H1 has been around 14-15%, and with deleveraging being on the cards for next couple of quarters, so are we sure we would be able to achieve 20% EBITDA margin for FY 2025? Yeah, that's what we broadly guided,Ms Parekh. Our current forecast internally is Q3, Q4 looks better, and we expect overall for the financial year, the EBITDA margins will be closer to 20%. Yeah. Even with deleveraging being on the cards? So- As I mentioned, our deleverage is almost at the will be behind us soon. So we don't expect that deleverage will haunt us forever. Yeah. Okay. And my second question is, I see our tax rate has been quite low this, for this quarter. So is this the same tax rate we should assume, for the rest of the quarter? Is this the... Or, we can assume the, historical ones? You can assume historical one, around 28% is the effective tax rate for H1. Okay. That answers my question. Thank you. Thank you. Thank you. The next question is from the line of Jesal Nagdawala from M3. Please go ahead. Good evening, Dr. Chava. And, you know, my first question is, you know, since CDMO can be a lumpy business, you know, where late-stage molecules may or may not flow through commercial. So what are the opportunities you are exploring in, say, the generic API space to improve capacity utilization? And if you could highlight any potential large volume molecules in the pipeline, in the event that we do have, you know, large capacity. Sorry to interrupt, sir. Please come a bit close to your handset. You sound a bit distant. Yeah, sure. So there are a couple of therapy areas which we believe Indian companies can gain advantage. We started working on those for the last one and a half year, and we expect those. I'll not give you the therapy areas right now until we do couple of products. We will start gaining some business maybe at the end of 2026 onwards. One DMF we are going to file maybe in the next quarter, not this quarter, next quarter, for which we are already started seeding. That's the first indigenous we developed large volume API in the therapy segment. Maybe we will give more clarity maybe in Q4 this year. Yeah. We have identified the few therapy areas for us to grow, which, you see, we can grow by selling more, but we want to grow by identifying some niche, large volume products where India hasn't played a big role so far. Yeah. All right. Thanks a lot. Thanks a lot, Dr. Chava. Thank you. Thank you. The next question is from the line of [Rohit] from Tara Capital. Please go ahead. Hello, am I audible? Yes, sir. Yeah, you are audible Rohit. Yeah. So last year also, if I remember, you mentioned that the second half of the year was actually better than the first half on the margin side, but we got 15% last year. Your voice is not clear. Is it better now? Better now, yeah. Okay. So I was just asking that last year also, I think, if I remember correctly, you mentioned second half will be much better than the first half on margins front, but we closed at 15% EBITDA margins. So, what gives you confidence that this time, we'll be able to clock that 20% margin guidance? I think business mix is going to change. The FY 2024 versus FY 2025, H2, if you look at our, not only business mix, but the quantum of business also will be better from FY 2025 to FY 2025. See, if you are saying that, H2 is better, we are already almost a month is over in our H2. So we have, reasonable visibility of what products, what quantities we are going to sell, and our margin profile look like. Yeah. Okay. And any broader business mix, like between CDMO and API and HDS? I think we expect growth in all segments. Yeah. Not only CDMO. Yeah. Okay. Okay, thanks. Thanks. That's all I have. 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 again. So just this, formulation sales, if you could break down into ARV formulation and non-ARV? So we are not adding any capacity to expand our ARV formulations. We are not. And neither- No, no, no. Uh. No, I mean, for the quarter, how much of the revenue is ARV and non-ARV? Oh, FDF, ARV and non-ARV. For H1- Yeah. For H1, INR 369 crore is an ARV sale. ARV, I mean. Yeah. Versus, in case the first quarter, 2024 months ARV only. Sorry, sorry. ARV is INR 369, and non-ARV is INR 233. Okay, sir. Just, just one brief question. Yeah. Thanks. The next question is on the line of Abhishek from Kotak Securities. Please go ahead. Yeah. Am I audible, sir? Maybe you have to come closer to your handset, Abhishek. Yeah, yeah. Sir, did you ever think about doing a QIP to resolve the debt issue? Like, many companies are doing this, like, have you given it a thought? No, no. We are not thinking in that direction at this juncture. Yeah. So we are having some stress, but we know that is not going to last long. So we believe we'll be able to gather that situation very easily. Yeah. Okay. Yeah. Yeah. Thank you. That's it. Thank you. The next question is from the line of Rohit Jain from Tara Capital Partners. Please go ahead. Yeah, hi. Am I audible? Yeah, Rohit, you are audible. Yeah, hi. In the first quarter presentation, you had mentioned that, you know, there was a sequential decline in API because of timing of shipments. And I guess this time also you mentioned somewhere that the fall is because of timing of shipments. So how should we think about it? Because I think about two, three quarters back, again, you had mentioned that there was an issue of timing of shipments. So this particular reason seems to be a recurring reason. So how should we think about this? Can you repeat your question, please? Yeah. I'm saying in the last quarter's presentation, for API growth being down sequentially, you had mentioned that, you know, overall sequential decline was due to timing of shipments. And, in this call also, you mentioned that some of the fall is because of timing of shipments. And about three, four quarters back, you had, you know, once again mentioned, that some of the fall was because of timing of shipments. My question is that this, timing of shipment issue seems to have occurred over the last two, three quarters continuously. So just wanted to understand, how should we think about it? So for non-ARV APIs, is the timing changes depending on what customer is. Whereas the ARV APIs is not a timing issue, it is, we have taken one manufacturing block for, modifications that disturbs some supplies. We are on track already. This week already, the facilities came on track, so we don't expect, in the entire year any disruptions in that. No, no. My question was that if last quarter was lower because of, you know, timing of shipment issue, then logically benefited from those, supplies getting shipped in this quarter, right? So, but we haven't seen that, benefit in this quarter. So I'm just trying to understand how should we think about that dynamic. One minute. No, it's. Maybe we have to take offline. We are not- You are asking, like, you know, in the last quarter, we said that there is some timing, because of some timing- Yeah. There is a lower sale. Yes. What happened? Yeah. What happened to this quarter? There is no, it's not recovered, right? So there are- Yeah. Like, unrecognized revenue even in the second quarter. Actually, second quarter, those sales have been made actually because of the revenue recognition, the end of September, the number is much higher than what it was in the June, frankly. ... But your observation is right. So, so that's what I'm asking. So is this a regular business feature then? Like, is this something that happens every quarter? No, it depends. Sometimes if there is more sea shipments, then this problem may arise. Just one more question I had. Hello? Hello. Go ahead, please go ahead. I was asking that, yeah, as one of the earlier participants asked, the seasonality of our business is such that, fourth quarter, we see lumpy sales, and hence our working capital improves and our debt to EBITDA, you know, improves. But, let's say if we go back again to the next year, first quarter, second quarter, would it be fair to assume that there would be a deterioration in our debt to EBITDA and working capital, given the basic seasonality of our business that you explained? As indicated by Dr. Satya in the previous question, so we are not giving a guidance there, but at the same time, on a yearly basis, we expect a growth. So because whatever investments we've made so far, those going to be turned into a returns. So again, I'm trying to give a next quarter, one quarter to how it will be, whether there will be a decline. I don't want to give a comment at this juncture, but we will maybe in April, we will give a guidance of how the next year will be. Okay. Thank you. All the best. Thank you for answering my questions. Thank you. Thank you, Rohit. Thank you. A reminder to all participants that you may press Star and One to ask a question. The next question is from the line of Samay, who is an individual investor. Please go ahead. Mr. Samay, your line has been unmuted. Please go ahead with your question. As there is no response from the... Sorry? Hello, am I audible? Yes, sir, you are. Yeah. So my first question to Doctor, sir. Sir, it mentioned in the investor presentation on slide number 25, we are following high standard for all our plants. I just want to ask about the December 2023, where we are receiving US FDA five observation for LSPL plant. I know we acquired this plant, but, we did in May 2020. It's a full year and still, I don't understand why we are not following same high standard for this plant, even if it is very small in revenue for us. Well, thanks for asking this question. So as you are aware, when we acquired that site, that site has an import alert. And FDA inspected, and they gave five observations. We responded. And today, that site, they have lifted the import alert. We have no import alert on the site. That is a good sign. So we are working with the agency. We have submitted our responses, and we are very hopeful to resolve that. Yeah. Okay. Thank you, sir. And the second question for Ravi, sir. Ravi, sir, what is our current gross block for FY 2025, at the end of FY 2025, what would be there? From now, actually, it will add at least INR 500 crore for the gross block. So it will be around maybe INR 6,700 or so. Okay. So, and if I add two thousand another by next two years, so by end of FY 2027, we would be around eight thousand five hundred. No, FY 2027, I'm sorry. I was just talking about next year, March 2026. FY 2027- March 2025, by end of March 2026 or FY 2025, we would be around six thousand and seven hundred, and by FY 2027, end of FY 2027 we would be around INR 8500-INR 9000 correct? No, I don't know. We're not giving any guidance for FY twenty- No, I mean- March 2025 I mean, you were saying that we will do around INR 2,000 crore. That's what I say. That's correct. That is March 2026, right, then? Not 2027 Okay. The last question for Doctor sir. Sir, I mean, is there any way we can see any money or profits from ImmunoACT by next H1, nineteen, by FY 2026 or FY 2027? See, that, that company is at the very formative age. So we'll, we'll do actions appropriate time. We believe this is not the right time. Okay, sir. Yeah. Thank you. That's it from my end. Thank you. A reminder to all participants that you may press Star and One to ask a question. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yes, thanks for taking the question, sir. So the CapEx of INR 2,000 crore that you indicated, can you elaborate, you know, specifically how much will go into APIs, how much in CDMO, how much in bio, in your biocatalysis venture? Maybe bio around INR 225 crore, and CDMO will be the major, and then probably FDF, another INR 200 crore. ... this is for the CMO. And of course, the rest all will be the CDMO, and then API will be lower. Okay. So predominantly, it's going into the CDMO piece? Yes, that's correct. For the CDMO contracts for your agrochemicals, when do you foresee commercial contributions starting? Maybe Q1- 2026. Yeah, Q1. Q1, okay. And the animal health will be starting in second half? Animal will start this year itself for some revenues. Yeah. So I thought last call we mentioned animal health, we should see contributions coming from second half of this year. Are you saying that there will be contributions, but you know, scale will be suboptimal and major- This year, there will be revenues coming from animal health. But next year also, the projections looks good for animal health. So, basically, two new revenue streams get added up next year, which should therefore have a substantial addition to top line for you. And on the formulations business, also you have a see, a contract with KRKA. I think you indicated you're doing a joint venture also. How should we think of that business scaling up from where it is today? JV will have its own presence in the next two and a half years. But in the meantime, we are adding capacity that will come handy from Q1 FY 2026 onwards. We expect some meaningful revenues coming from animal health, but not that significant from crop sciences right now. Right now, we have one contract. We are negotiating other products, other contracts. Validations will go on. So next year, meaningful revenues will come from animal health. Some revenues will from crop sciences, but the crop sciences meaningful revenues will only come in FY 2027. And FY 2027, animal health will go to optimum capacity. Right. Final one, you have almost, you know, you indicated the formulation sales from ARVs. I think the figure was around 300, if I got it correctly, around INR 300 crore? Yeah. For the quarter. Yeah, so that's on an annualized basis, almost twelve hundred- INR 169 crore. H1 is 369 ARV. Okay. Yeah. So, sir, eventually, whenever lenacapavir comes in, while you participate in the API and you know you cover for a shift, to whatever degree the shift happens, you cover for it by supplying the API. But on the formulation piece, you possibly stand to lose out unless you build out a fill finish facility or a fill finish line. Is that the correct way to understand it? That in ARVs, while overall sales, I do not know how much will be impacted, my personal perception is that it's going to be a big shift, just as you know, TLE to TLD happened. But for you, you know you can compensate on the API side, but not on the formulation side. Is that a correct way of understanding this? No, no, a very good question to ask. So currently, our API sale is about INR 1,500 crore-INR 1,600 crore, and INR 900-INR 1,000 crore is the formulations. It is two-thirds, one-third, roughly, in ARV. Will we lose an opportunity if we don't get fully integrated in Lenacapavir by sterile manufacturing? See, Lenacapavir also has a lot of clinical trials happening on the treatment side. The subcutaneous one is the prevention prep, whereas the treatment, they're coming with the oral versions, not every day, maybe weekly once or monthly twice treatment coming, and for that, we don't need sterile facility. So I, I think we are not at a disadvantage right now, because we, we may lose out in the prep space, but the prep is very, very prominent in the advanced market, not in the access to markets. So, we are not at disadvantage right now, but we are pursuing. We have time to catch up. So it's not that the shift will... We don't think shift will happen. Even it happens, we have another five years' time to get ready and then take the opportunity. Okay. Thanks, sir. That was helpful. Thanks for taking my questions. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of our Q&A session. I would now like to hand the conference over to the management for closing comments. Thank you everyone for your insightful questions and guidance guiding the management. Thank you, Manish, for hosting this call. Thank you. Thank you.